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The HR guide to people and cultural problems in M&A integrations

By Jim McKay | July 31, 2023

Practical considerations for senior managers on their “people and cultural” strategy in mergers and acquisitions.
Mergers and Acquisitions

Much research has been done on M&A, many articles written, and many opinions expressed. You’ll find some common conclusions: Most deals fail, and people and cultural problems lie at the heart of many of these failures. A statistic most often cited is that 70% of deals fail, meaning that they fail to achieve the goals that drove the business reasons to acquire in the first place. No matter what the true failure rate is, two facts are inescapable: 1) Deals will continue to happen, since most large firms use the M&A option as a component of their overall growth strategy, and 2) pulling off a successful deal, all the way through to integration, is extremely difficult. Any company must beat the odds to succeed.

Corporate executives often recognize this 70% failure statistic. It’s become common to regard culture, and the integration of cultures, as one of the major reasons behind deal failure and the most difficult area to get right in combining organizations. While we agree with this sentiment, we also believe that the people and cultural components are so interrelated that they should not be separated in any debate in this area. The people issues by themselves are complex, involving a combination of both hard, quantifiable financial measures and “softer,” nonquantifiable measures. People can indeed be an organization’s biggest asset, but they can also be a significant liability (reflected in the financial statements as the overall employment cost, including the cost of all related benefit plans). If employees continue to perform well, they can drive future organizational performance; if they don’t, they can be barriers to such improvements.

People also create the underlying organizational culture (without people, an organization, would have no cultural issues to contend with), and these two components taken together transcend all other parts of the organization. Further complications arise because these issues don’t fit cleanly into any formulaic approach, and no fail-safe solutions exist that can resolve many of the people and cultural problems.

Given this background, the purpose of this guide is to provide practical considerations for senior managers on thinking through their “people and cultural” strategy in mergers and acquisitions, thereby increasing their chances of pulling off a successful deal. After reading this guide, management will be able to identify the predictable issues that arise in this area and follow, in sequence, the three practical steps we offer to frame, analyze, prioritize and ultimately resolve the common people and cultural problems in corporate transactions.


Managing Director, Global M&A Client Experience Leader
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