M&A Integration

Did you know 70-90% of mergers and acquisitions fail?¹ Fingerprint for Success (F4S) can predict the likelihood of cultural synergy with 90% reliability. In a revolutionary first, F4S maps out a tailored integration plan to support M&A alignment.

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Predicting cultural challenges for integration success

An astounding 70-90% of mergers and acquisitions fail, according to Harvard Business Review¹. Without a robust integration strategy to successfully unite two company cultures, many organizations set themselves up for failure.

According to Mckinsey, 95% of executives describe cultural fit as critical to the success of integration. Yet 25% cite a lack of cultural cohesion and alignment as the primary reason integration efforts fail.⁷

Fingerprint for Success (F4S) can predict the likelihood of cultural synergy with 90% reliability and, in a revolutionary first, maps out a tailored integration plan to support M&A alignment. Read on to discover common cultural and business challenges in post-merger integrations – and how F4S helps organizations navigate the integration process.

Why is culture important to capture deal value in M&A integration?

Culture is a critical but often forgotten aspect of M&A integration (also known as post-merger integration). As much thought should go into cultural integration as the financial and legal aspects of a merger – ignore it at your peril.

Without giving company culture the attention it deserves, major organizational problems are almost a given. What is culture? Think of it as the ingrained aspects of an organization, such as leadership and communication styles, and company-wide behaviors, mindsets and social structures.²

At one end, you might have an established company with a traditional approach that prioritizes rigid processes and maintaining the status quo. On the other, the target company could be a fledgling start-up with an agile approach, out-of-the-box ways of doing things, and pioneering team members.

In jarring cultures like these, post-merger integration issues can easily arise. Add to this poor communication between integration leaders and employees, the departure of important personnel, underutilized talent, lack of motivation, and growing disharmony between the two parties and problems inevitably emerge.

Not only can cultural discord create friction, it can also sabotage the value of the deal and future success. Naturally, any M&A agreement is undertaken to boost a company’s value – either through increased scale or cost savings – but when people aren’t properly considered, obstacles to successful post-merger integration arise and business output can drop.

Organizational culture directly affects the employee experience. As a result, the customer experience, business relationships and shareholder value are all impacted.³

Put simply, when there’s cultural friction, an M&A’s potential value decreases or disappears entirely, becoming one of the 70-90% of deals that fail.

Often, these challenges only arise after the deal is done. That’s why it’s essential to consider the cultural alignments and disparities of each organization well in advance. Organizations can then engage the right leadership, dedicated integration teams and advisory services to provide counsel on merging the two companies more effectively – and mitigate the risk of failure.

Beyond the initial cultural assessment, leaders and companies need to take steps to ensure a seamless and efficient M&A integration journey both during the M&A process and afterward. This is not to say there won’t be hiccups during the integration phase, but knowing what problems could arise and having an effective integration plan in place can empower leaders to pre-empt and identify potential challenges before they do real damage.

How culture mapping can add value to mergers and acquisitions

Navigating the cultural challenges around M&A integration is a delicate procedure. Deeply understanding both team cultures well ahead of the deal and having a disciplined approach to successful integration is vital.

This is where F4S comes in. The F4S Culture Map allows you to dive into the fundamentals of each entity – the acquiring company and the target company. Using data, F4S’ 20+ years of research, and predictive analytics, the Culture Map pinpoints and forecasts personal and team motivations and attitudes. The comprehensive model and report indicates performance with statistics you can rely on in a contextualized setting.

Outcomes with F4S:

Understand the cultural fundamentals of the target company and acquiring entity on an individual and company-wide level.

Discover similarities between entities to create greater efficiencies.

Identify cross-cultural gaps to better navigate post-merger integration challenges.

When it comes to M&A integration, the benefits you can expect from the F4S Culture Map include:

Identify cross-cultural alignments

Knowing the similarities between the two entities enables you to optimize and build on them, and make these areas more efficient

Recognize gaps between entities

Identifying in advance potential points of conflict or miscommunication or where the integration is at risk of breaking down

Reach goals sooner

Determining the right leadership team for the newly merged entity can help your organization kick its goals faster

STEP 1: Assessing the team making the acquisition

Analyzing the culture of the organization making the acquisition on both an individual and company-wide level is an important first step. The goal of this part of the process is to deliver a snapshot of the current state of the acquiring organization.Working styles, employee communication preferences, and cultural values and affinities are all unearthed, along with other key cultural attributes that make an organization tick. F4S technology even pinpoints X-factors (strengths or what makes a team or organization unique) to help determine the odds of success. Crucially, organizational or team blind spots are also identified. This allows F4S to forecast any challenges.

STEP 2: Assessing the team being acquired

An identical evaluation of the target company is the next step. Similar to Step 1, F4S analyzes individual and organizational work style motivations. Examples include communication styles, approaches to working, decision-making and cultural values and affinities. This can be performed across the entire organization or just on the leadership/C-suite team, depending on the needs of both entities.

STEP 3: Mapping cultural similarities and differences

Using empirical data gleaned from the first two steps, F4S assesses the similarities and differences between the two cultures. This uncovers where they overlap and where any issues are likely to arise.This step also includes a complete analysis of what the newly merged culture will look like, an incredibly useful tool.

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Predicting cultural challenges and how to align

An astounding 70-90% of mergers and acquisitions fail, according to Harvard Business Review¹. Without a robust integration plan to successfully unite two company cultures, many organizations set themselves up for failure.

Outcomes with F4S:

Understand the cultural fundamentals of the target company and acquiring entity on an individual and company-wide level.

Discover similarities between entities to create greater efficiencies.

Identify cross-cultural gaps to better navigate post-merger integration challenges.

Why is culture important to capture deal value in M&A integration?

Culture is a critical but often forgotten aspect of M&A integration (also known as post-merger integration). As much thought should go into cultural integration as the financial and legal aspects of a merger – ignore it at your peril.

At one end, you might have an established company with a traditional approach that prioritizes rigid processes and maintaining the status quo. On the other, the target company could be a fledgling start-up with an agile approach, out-of-the-box ways of doing things, and pioneering team members.

In jarring cultures like these, post-merger integration issues can easily arise. Add to this poor communication between leaders and employees, the departure of important personnel, underutilized talent, lack of motivation, and growing disharmony between the two parties and problems inevitably emerge.

Not only can cultural discord create friction, it can also sabotage the value of the deal. Naturally, any M&A agreement is undertaken to boost a company’s value – either through increased scale or cost savings – but when people aren’t properly considered, obstacles to successful post-merger integration arise and business output can drop.

Organizational culture directly affects the employee experience. As a result, the customer experience, business relationships and shareholder value are all impacted.³

Put simply, when there’s cultural friction, an M&A’s potential value decreases or disappears entirely, becoming one of the 70-90% of deals that fail.

Beyond the initial cultural assessment, leaders and companies need to take steps to ensure a seamless and efficient M&A integration journey both during the M&A process and afterward. This is not to say there won’t be hiccups on the way to successful integration, but knowing what problems could arise and having an effective integration plan in place can empower leaders to pre-empt and identify problems before they do real damage.

How culture mapping can add value to mergers and acquisitions

When it comes to M&A integration, the benefits you can expect from the F4S Culture Map include:

Identify cross-cultural alignments

Knowing the similarities between the two entities enables you to optimize and build on them, and make these areas more efficient

Recognize gaps between entities

Identifying in advance potential points of conflict or miscommunication or where the integration is at risk of breaking down

Reach goals sooner

‍Determining the right leadership team for the newly merged entity can help your organization kick its goals faster

In short, uncovering individual and company-wide working styles, communication preferences, and cultural values and affinities can reduce cultural friction in the post-merger integration phase and accelerate strategic objectives

“F4S’ proprietary tools are designed to foster M&A success”

Josh says:

“F4S’ proprietary tools are designed to foster M&A success. Relying on these throughout the process of merging with or acquiring another company can not only improve organizational harmony, but also help companies reach the full value of the deal.”

Josh Ainslie, M&A Lead at Fingerprint for Success

Michelle says:

“Fingerprint for Success builds on 20+ years of research to deliver robust people analytics and data-driven insight and learning. For companies undertaking M&A deals, this means a science-backed approach to integration that also prioritizes culture and people.”

Michelle Duval, Founder & CEO at Fingerprint for Success

Our methodology: 3 steps to predicting a successful M&A integration

Harnessing F4S’s extensive people analytics technology enables leaders and organizations to better predict potential cultural issues going into a merger. They can then create strategies to help tackle them.

F4S’ technology undertakes thorough due diligence with employees on both an individual and organizational level. Then, potential synergies and blind spots between two organizations can be mapped and visualized. Because strong integration leaders are such a crucial component of a successful M&A deal, F4S can also unearth the very best talent within the oganizations to unify and lead a successful integratrion.

PREDICTING PHASE
Using validated and proprietary technology, F4S can accurately predict the cultural impact of bringing two entities together. Here’s what you can expect from the three-step process:

STEP 1: Assessing the team making the acquisition

Analyzing the culture of the organization making the acquisition on both an individual and company-wide level is an important first step. The goal of this part of the process is to deliver a snapshot of the current state of the acquiring organization.

Working styles, employee communication preferences, and cultural values and affinities are all unearthed, along with other key cultural attributes that make an organization tick. F4S technology even pinpoints X-factors (strengths or what makes a team or organization unique) to help determine the odds of success. Crucially, organizational or team blind spots are also identified. This allows F4S to forecast any challenges.

STEP 2: Assessing the team being acquired

STEP 3: Mapping cultural similarities and differences

Using empirical data gleaned from the first two steps, F4S assesses the similarities and differences between the two cultures. This uncovers where they overlap and where any issues are likely to arise.

This step also includes a complete analysis of what the newly merged culture will look like, an incredibly useful tool.

F4S methodology: our approach to achieving M&A cultural alignment

Once F4S has assessed both company cultures and mapped the newly merged entity, the actual work toward successful M&A integration begins.

ALIGNMENT PHASE
Again, F4S takes a step-by-step approach to the union of two organizational cultures. This is generally what the process entails.

STEP 1: Reporting on the newly merged entity

Entities receive a comprehensive report that details the newly merged entity, as well as predictions on successful merger integration.

The F4S report delivers the following outcomes:

Explores differences in company values, morale, and leadership, and suggests how best to address these in a strategy map
Nominates team members who can act as translators and ambassadors to allow the integration to succeed. The F4S Insights platform identifies top talent in selected contexts. This enables organizations to leverage these X-factor skills during and after the merger
Identifies team members who may struggle with M&A integration. For example, some employees can be at risk of establishing a toxic culture either during or after the merger. Organizations can support, develop, or redeploy these employees, or find another suitable solution‍
Forecasts commercial results. For example, based on the F4S motivation assessment, Organization 1 may be highly motivated to increase profits. Organization 2 may be less financially motivated. That focus in the newly merged entity may be diluted, resulting in business challenges and poor commercial outcomes

STEP 2: Delivering transition strategies

F4S lists the strategies required to make post-merger integration easier. These include customized workshops in the short and long term.

WHAT YOU RECEIVE:

An in-depth white paper with the detail you need to succeed
‍
The F4S proprietary Culture Map tool can highlight strengths, blind spots, gaps, impacts, and recommendations across multiple teams
‍
The Cultural Comparator calculates absolute and relative scores and compares them to one another

Frequently asked questions

What is M&A in legal terms?

Mergers and acquisitions is an area of corporate law. It generally involves two or more organizations that are fusing businesses. A combined company can result through merging, buying assets or shares, undergoing hostile takeovers, consolidating, or other types of transactions.^{4 5 6}

What is integration in mergers and acquisitions?

Integration is the process that happens after a merger or acquisition deal. It’s where the organizational systems, operations, resources, and people of the target company combine with those of the acquiring organization.

Why is M&A integration important?

M&A integration – also known as post-merger integration – is a critical part of any merger or acquisition. The post-merger integration process helps two entities identify synergies, gaps, goals, and other aspects of each organization that they can optimize. By undertaking M&A integration due diligence, both entities are in a better position to realize the predicted value of the deal.

In what phase of M&A activity should integration planning begin?

Integration planning should kick off as early as possible – ideally at the very start of the deal. This can allow you to put effective integration teams in place and greatly increase the chance of success. It can also show employees across both organizations that thought has gone into post-merger integration, and that the newly combined company is focused on what matters. In turn, this can further help to mitigate many of the cultural challenges that could arise.

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Show References

Hide References

Christensen, C. M., Alton, R., Rising, C., Waldeck, A. (2011) 'The Big Idea: The New M&A Playbook'. Available at: Harvard Business Review https://hbr.org/2011/03/the-big-idea-the-new-ma-playbook
Groysberg, B., Lee, J., Price, J., Yo-Jud Cheng, J. (2018) 'The Leader’s Guide to Corporate Culture'. Available at: Harvard Business Review https://hbr.org/2018/01/the-leaders-guide-to-corporate-culture
Able, R. M. (2007) 'The Importance of Leadership and Culture to M&A Success'. Available at: Institute for Mergers, Acquisitions & Alliances https://imaa-institute.org/importance-leadership-culture-ma-success/
'Mergers and Acquisitions'. Available at: Georgetown Law https://www.law.georgetown.edu/your-life-career/career-exploration-professional-development/for-jd-students/explore-legal-careers/practice-areas/mergers-and-acquisitions/#:~:text=Mergers%20and%20acquisitions%20(M%26A)%20is,or%20merging%20with%20other%20companies.
(2021) 'Mergers & Acquisitions'. Available at: Cornell Law School, Legal Information Institute https://www.law.cornell.edu/wex/mergers_acquisitions
Hayes, A. (2022) 'What Are Mergers and Acquisitions (M&A)?'. Available at: Investopedia https://www.investopedia.com/terms/m/mergersandacquisitions.asp#toc-types-of-mergers-and-acquisitions
Authors: Oliver Engert , Becky Kaetzler , Kameron Kordestani, and Andy MacLean, Available at: https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/organizational-culture-in-mergers-addressing-the-unseen-forces

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M&A Integration

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There's a template for that

Card heading

Predicting cultural challenges for integration success

Why is culture important to capture deal value in M&A integration?

How culture mapping can add value to mergers and acquisitions

Outcomes with F4S:

When it comes to M&A integration, the benefits you can expect from the F4S Culture Map include:

STEP 1: Assessing the team making the acquisition

STEP 2: Assessing the team being acquired

STEP 3: Mapping cultural similarities and differences

Resources

Behind the successful people you know, there’s a coach.

Explore more use cases

Powering Coaching at

Get started today

Section heading (h2)

Heading Tab 1 (h3)

Heading Tab 2 (h3)

Heading Tab 3 (h3)

Predicting cultural challenges and how to align

Outcomes with F4S:

Why is culture important to capture deal value in M&A integration?

How culture mapping can add value to mergers and acquisitions

When it comes to M&A integration, the benefits you can expect from the F4S Culture Map include:

“F4S’ proprietary tools are designed to foster M&A success”

Our methodology: 3 steps to predicting a successful M&A integration

STEP 1: Assessing the team making the acquisition

STEP 2: Assessing the team being acquired

STEP 3: Mapping cultural similarities and differences

F4S methodology: our approach to achieving M&A cultural alignment

STEP 1: Reporting on the newly merged entity

STEP 2: Delivering transition strategies

WHAT YOU RECEIVE:

Frequently asked questions

What is M&A in legal terms?

What is integration in mergers and acquisitions?

Why is M&A integration important?

In what phase of M&A activity should integration planning begin?