People culture

To avoid disappointing performance following an M&A, the acquiring company must decide which culture the new organisation should adopt.

by Harvard Business Review
Last Updated: 23 Jul 2013

This decision ought to be based on the type of culture it needs to achieve its strategic goals. Following this, the acquiring firm should conduct a due-diligence exercise to find out whether the two cultures will be compatible.

It is critical to assess the strengths and weaknesses of the other company's culture, people and organisation. Before the deal is on the table, it is possible to gain an insight by looking at the reporting structure or the process behind executive decision-making.

Look at organisational charts, talk to decision-makers and take stock of assets. Once the deal is on the table, spend more time at the company, soaking up the management style.

Surveys are also useful to gauge how employees describe their culture and how they visualise the new one. It is advisable to get third-party opinion; for instance, to ask customers of the acquired company who its best sales reps are. Human due diligence,
David Harding and Ted Rouse,
Harvard Business Review, April 2007

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