Why do 83% of mergers or acquisitions fail? Because too much emphasis is put on the financials and not enough on the people and the culture.
That’s the focus of an article in TLNT last month by Ron Thomas, and I couldn’t agree more. In the article, Ron says:
“Interviews of over 100 senior executives, according to the KPMG report, which tracked close to 700 deals over a two year period, revealed that the overwhelming cause for failure ‘is the people and the cultural differences.’ …
“It is understood by all that financials are (and should be) at the top of the pyramid. The problem is that many of the specialists leading the M&A team are, for the most part, financial people. They are also expected to handle the implications of culture and people, which is totally not their domain of expertise. These major challenges are underestimated all too often, and in the M&A environment, end up at the bottom of that same pyramid. …
“Numbers only tell a part of the story. Numbers can paint a portrait, but in order to paint a masterpiece, the formula is People + Culture + Numbers = Success.”
One client of ours tells the story of their rapid growth through multiple acquisitions in a very short period of time. As a consequence, they developed a “culture of cultures.” You could walk into a meeting and plainly see each person evaluating the other attendees, “She’s one of us. He’s one of them. I’ll go sit with her.”
To overcome that “culture of cultures,” Symantec decided to create a new culture of recognition, centered on a new set of core values meaningful to all of the employees. Within 9 months, Symantec saw a dramatic turn-around in how people thought about their colleagues – along with a 16% increase in employee engagement.
Don’t let numbers rule when planning for a successful M&A. Be sure to include your people and culture as part of the success equation outlined by Ron.