New Articles
  April 9th, 2021 | Written by

M&A Includes Smart Navigating of Culture Issues When Merging

[shareaholic app="share_buttons" id="13106399"]


  • Early in the integration process, have the team start identifying how each company operates.
  • Seize the opportunity and build a new corporate culture that benefits everyone involved.

Mergers and acquisitions are a common part of the corporate life cycle. For example, in the tech industry, many established companies will expand into new markets by buying startups that are innovating in emerging fields. But integrating a tiny startup into a much larger company can be challenging because they may operate in very different ways. Any merger could face similar issues, even with companies that seem similar. However, companies undergoing a merger can mitigate these clashes by recognizing each organization’s cultural distinctives and seeking thoughtful changes that benefit the combined whole.

A number of years ago, Deloitte conducted a survey to investigate issues of culture in mergers and acquisitions. The report defined culture as “the long-standing, largely implicit shared values, beliefs, and assumptions that influence behavior, attitudes, and meaning in a company.” In other words, corporate culture is how employees as a group think and act, and sometimes, cultural differences can become serious enough to derail integration.

As a simple example, a small startup might have Ping-Pong tables in the break room and provide sushi lunches for everyone on Fridays. These niceties may be less likely to persist at a large company with a stricter culture, so a merger between the two corporations could lead to disagreements between “fun” and “serious.” While disagreements over perks might frustrate employees, cultural differences can be much more serious, such as how leaders make decisions or how managers relate to their subordinates.

The first step to reconciling cultural differences is identifying them. As Deloitte notes, “The most insightful cultural observers often are outsiders, because cultural givens are not implicit to them.” Consider engaging key people from both companies to work on the cultural differences and decide how to reconcile them. This cultural integration team should hash out the details of what the key differences are, what needs to be kept, and what needs to be changed.

Early in the integration process, have the team start identifying how each company operates. Management style is an important aspect, but you should also consider how employees interact with each other and with managers within the company. Try to identify the implicit assumptions that both companies have. Once you have identified these assumptions, determine which ones align with the goals and vision of the combined company. Keep what will help.  Change what will not.

Throughout the process, make sure that the integration team communicates clearly what is happening and why. But do not simply dictate what changes will be made. Genuinely ask for input from employees at both companies. Keep them in the loop. Many people are wary of change, but transparency and being willing to listen will help prevent alienating anyone, which will encourage employees to stay.

When cultural integration is handled well, the combined company benefits from the strengths of the original organizations. McKinsey points out that “A merger provides a unique opportunity to transform a newly combined organization, to shape its culture in line with strategic priorities, and to ensure its health and performance for years to come.” Seize the opportunity and build a new corporate culture that benefits everyone involved.


Louis Lehot is an emerging growth company, venture capital, and M&A lawyer at Foley & Lardner in Silicon Valley.  Louis spends his time providing entrepreneurs, innovative companies, and investors with practical and commercial legal strategies and solutions at all stages of growth, from the garage to global.