About the series
The intent of the series, The M&A cultural practices of advanced acquirers, is to share the current state of leading practices in cultural work, specifically and only for the M&A situation. To view the white papers in this series refer to the series page or the "also in the series" list.
This paper is the fourth in a series about advanced M&A cultural practices. The intent of the series is to share the current state of leading practices in cultural work, specifically and only for the M&A situation.
It is based on the findings from a unique and highly experienced group of M&A practitioners that meet on a regular basis with WTW to share and discuss their views on this area. Each firm’s participants are drawn from its in-house M&A functions, representing corporate development, business development or corporate strategy (the term varies based on each firm’s internal definition of the role) and its human resources M&A group. Throughout the series, the content reflects the discussions within the group and not the sole practices of any one firm.
The distinguishing feature about the group that will also help readers understand the content better is that cultural investigations are an accepted part of their M&A process.
The first paper in the “M&A cultural practices of advanced acquirers” series showed how M&A practitioners brought structure and discipline to cultural discussions through capturing in one place the parts of culture that have the greatest impact on a transaction (the culture framework). The second paper covered how they created the business rationale for incorporating culture as part of their approach throughout the deal life cycle. The third paper built on the previous two and showed how M&A practitioners use the cultural investigations in reporting their findings to leadership.
This fourth paper focuses on “value” and how to deliver extra value from the business combination, over and above what already existed in each business. Delivering value means achieving, or exceeding, the value-based goals that are built into the deal rationale and financials. Achieving these goals will significantly increase the odds of overall deal success. However, these are traditionally the most difficult of all deal goals to realize.
The balance of this paper focuses on the areas that are most important to achieving this value. These are represented by the value goals, their drivers and, in particular, the contributions people can make and the changes they must adapt to as they alter the way they work and operate to meet new objectives.
While problems in these areas take root early, there is a significant time lag before their impact becomes evident. They typically surface in the later phases, particularly the integration and transition to the “business as usual” phases, where the business results of the transaction show through. And they appear in various ways, often slowly: Customers disappear, revenues decline, and leaders and talent leave. Bottom line: The sought-after value of the deal disappears.
Other deal goals and issues typically help preserve value in what was bought by transitioning the seller to the larger company’s operating model, maintaining existing productivity and reducing business disruption risk during the transition. These areas typically are left in the hands of the integration team and functional leaders, and decisions in these areas are more tactical and center on providing the guidance, resources and funding to support these goals. Done well, these areas provide a solid foundation to support a sharper focus on value-based goals but done poorly the prospect of significant business disruption will restrict the ability to focus on “value.”
As is customary throughout the series, we feature quotes and examples drawn from members of the M&A cultural group. Where necessary, the quotes and comments are edited for readability and to protect the confidentiality of the contributing company.
Also noted throughout the series, each firm has its own company-specific framework and different ways of describing the work it does in “culture,” so the terms “cultural work,” “assessments,” “investigations” and “organizational assessments” (the term several use for their cultural work) are used interchangeably. Likewise, each firm has different ways of establishing the team to address culture. The important point being that each firm has an organized and disciplined approach to the work and a clear rationale for that work.
Download the white paper and learn how M&A practitioners deliver value from the business combination, over and above what already existed in each business. It’s this intense focus on value that separates the successful from the rest.
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