Want a successful M&A? Don't leave culture until last


There’s been a surge in mergers in acquisitions due to low interest rates, abundant investment capital and recovering economies – not to mention the pandemic forcing businesses to pivot and adapt strategically.  

Active Campaign recently acquired Postmark and DMARC Digests, and Noble Corporation is set to merge with Maersk Drilling. The success of these M&As is yet to be seen, but it’s a well-documented fact that more than 70% of mergers and acquisitions fail and that 83% of mergers don’t boost shareholder returns. The problem? It all comes back to culture.   


Why M&As fail  


Value destruction, poor communication, poor integration, and cultural differences are some of the most common reasons for an M&A to fail. If these issues are not addressed, it can be very difficult to make a merger or acquisition a success. According to one study by Deloitte, culture was found to be the cause of 30 percent of failed integrations. 

When businesses are combining forces, it’s often viewed purely from a business perspective – to increase market share, to bring new products to market, to increase operational capacity, to achieve cost efficiency, and to create a strategic advantage. For example – it would make sense that a small, local snack brand wants to be acquired by a large global corporation with a big market share so that they can get the snacks more widely distributed. For the corporation, they are buying into innovation and owning niche parts of the market – it just makes business sense. 

It may make business sense, but you can almost guarantee that the cultures, employee experience and ways of working will be completely different between the two. For these two businesses to come together and be successful, there will need to be one new aligned business culture. The business has to shift, the leaders have to shift, the employees have to shift, and so do the processes and ways of working (unless it’s an intentional decision to not integrate but run them as standalone). It’s a big transformation and it’s not as simple as signing the documents and getting everyone together and getting on with it.  

Venture Capital and Private Equity firms do their due diligence business-wise. Weighing up all the possible risks, and opportunities, and planning how the businesses will function in their new guise. But what’s often not considered in enough detail is the culture.   

It often falls under operations, but culture is about the people, the ways of working, the behaviours, attitudes, mindsets and the everyday experience of the business. And this is what makes a business thrive or die – not giving it enough attention or failing to focus on the people aspects at all is what will ultimately cause your M&A to fail.   


Failure doesn’t have to be an option  


Culture isn’t part of the due diligence businesses do pre-M&A and it’s simply seen as a ‘nice to have’. But, is your bottom line really a ‘nice to have’? 

Culture has been referred to as the ‘black box of integration’ due to its ability to make or break an M&A. According to Raconteur, when people feel disconnected from their workplace, culture and purpose, the likelihood that they will produce great work falls by 90%. Getting the people in the new entity, aligned behind one strategy, one purpose, and one culture as soon as possible is essential.  

You might be thinking ‘we’ve already started integrating, surely it’s too late?  Actually, no. Now will be a perfect time.  

In any merger or acquisition, the cultures of the businesses need to be looked at. What needs to be determined is – is one culture already better suited to delivering the strategic aims than the other? Or is there a best-of-both approach that can be taken? Or is a completely new culture required to reach the business goals?  

These aren’t easy questions to answer, but by objectively looking at the goals of the business and then putting the cultures under the microscope, you can get the right answer.  

Assessing everything from employee experience, employee engagement, daily working practices, customer satisfaction, mission, vision, and values, leadership capabilities and management will paint a picture of what’s going on, and what needs to happen next.


Now for the tricky part 


You need to scrutinise every level of the business and leave nothing unturned to get a full picture of what’s going on, so you can ensure a successful M&A going forwards.  

You need to design the right culture to meet the objectives of the business. You might find that one of these cultures will help meet the objectives and needs to be adopted. Or perhaps a best-of-both needs to happen, blending two cultures into one new one. Or perhaps the creation of a sub-culture could be beneficial – this often happens with acquisitions, where a larger global organisation may acquire a small business and they become a regional entity or a specialist division.  

This is a critical part of the process. It ensures that the culture is designed to accommodate the inevitable changes to leadership, organisational structure, and ways of working. Once you’ve decided you can then start designing from the top down. Start with mission, vision, and values. Then look at leadership and ways of working. Lastly, policy, and the employee lifecycle. 

When it comes to leadership you’ll need to take a look at behaviour. Not in a teacher-student sort of way, but you need to assess the leadership capability of the businesses currently – seeing what’s working and what isn’t, and then think about what capability you need for the future. It may be that your leadership capability isn’t fit for future purpose – a tricky thing to tackle, but it can be the difference between a successful M&A and a failed one.  

The employee journey and lifecycle are important factors to consider. M&As can be a very unsettling experience for employees, as it’s all out of their control. Employees will have concerns about their jobs, wonder how they will be personally impacted, and be unclear about what the business may look like in the near future.  

Employees often get forgotten in the M&A process. Really engaging them in the journey, and having great communication and education around the changes to come will create a nurturing environment for them. The employees are the ones who will ultimately be making the M&A a success and influencing how much business benefit will be reaped. You’ll not only need to care for them during the M&A, but you’ll need to revisit your employee value proposition (EVP) post-M&A, to see what changes you need to make to ensure the new entity’s culture is aligned.  




  • Assess the cultures of the businesses  
  • Assess current ways of working  
  • Assess the capability of leadership  




  • Design the future culture which will underpin the future strategy of the new entity  
  • Design the mission, vision, values and behaviours for the new culture to meet strategic goals 
  • Design the strategic narrative, EVP, and other elements which will enable change  




  • Engage the people in the change communication and education are critical
  • Embed the culture in the new entity through team-based embedding, to make sure culture change sticks and behaviour changes  

And, if you don’t want it to be so tricky?  


In short, we’re great with complexity. We’ve helped a number of big names with their mergers and acquisitions – gain insight, designing and embedding cultures to ensure a successful M&A.   

We’d love to get your questions answered on how we can make your M&A a success…