Cultural integration issues in M&A transactions have direct financial implications on deal value, according to the results of Mercer’s Cultural Integration Snapshot Survey. The survey, which included 119 organizations from across the Americas and Europe, found that more than half of respondents reported that the success of recent M&A transactions was negatively impacted by cultural integration issues.
Asked to estimate the financial impact of cultural integration issues, respondents differed only slightly between the American and European surveys. In the American survey, forty-four percent of respondents reported that between US$1 million and US$5 million was lost or not realized in a significant transaction their organization had recently undertaken, with nearly one quarter estimating that it was over US$5 million. In the European survey, forty-three percent of respondents reported that between €1 and €5 million was lost or not realized in a recent significant transaction, with nearly 30 percent estimating that it was over €5 million.
“Cultural integration has a significant impact on the benefits of deals for organizations,” said Elisa Hukins, the leader for cultural integration in Mercer’s M&A global consulting business. “According to several of our clients, the impact of cultural integration can be much greater when the synergies lost, as a result of cultural misalignments over time, are factored in. We are working with one organization that estimated that its failure to quickly manage conflicting cultures early on “cost” them hundreds of millions of dollars of lost revenue over a three year period.”
“Our research confirms that organizations are starting to turn this tide by developing processes, tools and capabilities aimed at reducing the risks and taking advantage of the opportunities presented by organization culture before, during and after a deal closes. Significantly, organizations citing a more positive impact of culture in recent major transactions were those that had invested in implementing structured cultural integration processes and programs from as early as the due diligence phase.”
Source: Mercer
Tell Us What You Think!