New Study of Impact of Culture Clash on M&A Success

Everyone talks about the impact of culture clash on mergers and acquisitions.  However, very few rigorous studies have been conducted on the topic.  A new study of 500 Chief Financial Officers (CFOs) identified "incompatible cultures" as the number one factor contributing to integration failure.  That's right--its the FINANCE types who acknowledge this.

My experience in over 100 merger and acquisition cases is that it is not the extent of cultural compatibility which matters in eventual financial results but, instead, how the cultural differences are managed.  I have seen cases of substantial cultural differences that are well managed by leadership.  And, I have seen cases of integrations of fairly compatible cultures being poorly managed.

If properly managed, cultural differences can lead to break-through thinking and innovative solutions among the combination partners.  If the two sides are cultural clones, then they do not challenge one another to think of new and better ways of thinking about and doing things.  If the two sides are cultural opposites, then they cannot have civilized discussions.  But, if there is a moderate amount of culture clash--and leadership manages it well--then the two sides can build upon one another to make one plus one equal three in M&A!