How do Different Cultural Perspectives Impact Global Mergers and Acquisitions?

Different perspectives = different priorities.

This is true of anything in life and especially in global business.

The recent article we published on how culture shapes M&A, is a demonstration of the different perspectives and different priorities that take part in business.

As a result of the mix of influences that have stemmed through our family backgrounds, education and corporate cultures, human beings come to view similar situations in very different lights.

In the intercultural business world, for instance, cultural factors are constantly influencing the way in which business is done.

Where culture is understood, it can be leveraged and used positively. All too often however, cultural influences are ignored. This is often the case in joint-ventures, mergers and acquisitions where due diligence is  only applied to standard due diligence topics.

Unfortunately, when cultural considerations are ignored during this critical process, it often comes back to trip new joint ventures up post completion.

Cross cultural teams, for example, fail to bond or to work together productively and conflict, miscommunications and resentment may well emerge. 

As such, we strongly advise that ‘cultural due-diligence’ should be a key element in the assessment required prior to joining forces.

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The Importance of Culture in M&A

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I asked a couple of our senior trainers about their experiences of businesses undergoing such processes and why the cultural elements was not seen to be of more importance.

One of our Switzerland based trainers, J.B wisely observed that “during these often hectic and intense times characteristic of the “due diligence” periods - on the financials, market considerations, legal aspects and analysis of compensation & benefits grids. Most of the time the human and cultural dimensions are not even looked at, or not in insufficient depth, until the pain is felt strongly latter during the post-merger integration process”.

So, in an ideal world, what can be done?

V.A who is based in the UK explained that “cultural assessments can be done in steps 1) high level cultural review to identify risks pre-business transaction 2) during post contract with a comparative organisational assessment 3) analysis to understand cultural landscape and set strategic cultural plans linked to business plan and brand 4) facilitations and implementation 5) management development with focus on styles and culture”.

This is a lengthy, yet thorough process. However as time and money are always scarce, what initially can be done to mitigate failure?

As the case studies in the article have shown, there is a correlation between cultural awareness and success or failure.

J.B agrees that “companies that invest some time and energy into this type of exercise, are likely to be much more successful afterwards, enabling them to save time, energy, reduce risks and tensions between the entities, teams and people. It is a very good approach to do a high level cultural review based on selected interviews during the “due diligence period” and then do a more in-depth cultural assessment and analysis at the beginning of the integration phase”.

Awareness of the partner’s corporate and national cultures, strong leadership, communication and trust are all key factors that should, in an ideal world, be taken into consideration.

How do we get there? I would say, through cultural training and education. In addition, these case studies we use have shown that cultural awareness in the context of M&A is a slow and step by step process that often comes up as a priority only when cultures clash.

So always remember, different perspectives = different priorities!

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Photo by Anika Huizinga on Unsplash

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