This series is designed to provide insights into the current state of leading practices in cultural work for the M&A situation.
It is based on the findings from a unique and highly experienced group of M&A practitioners, where each firm’s participants were drawn from their in-house M&A functions, representing either corporate development, business development or corporate strategy (the term varies based on each firm’s internal definition of the role) and their 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 is that cultural investigations are an accepted part of their M&A process. Consequently, in this series we focus on:
- What they do in culture work
- When and how they do it
- Why they should do it
About the types of transactions in the group’s discussion
The discussion is centered on bigger firms buying smaller firms with an emphasis on “talent” based deals, meaning deals where the people at a target are deemed the most important asset, among all the other assets at a target. For most buyers, the deal strategy centers on acquiring to expand their capabilities (also known as “scope deals” in M&A circles).
We did not consider any transaction that transformed a company to such an extent that creating a “new” culture, or third culture was required. While these transactions do happen, they are a very small percentage of actual deals. Likewise, large industrial deals, and mega-mergers, while discussed within the group, are not the focus of this paper. The consensus is that the size, scale, and global scope of these deals made it difficult to incorporate the approaches discussed here early, and that there were many other “assets” in the combining firms, well beyond just talent and employees.
Finally, the issue of growth or erosion of shareholder value as a specific goal, as seen through buyer stock price changes, is not typically a goal of talent-based deals and was not a factor in our analysis. In contrast, larger deals lend themselves better to share price comparisons with peer companies, since this data is publicly available and can then be analyzed by consulting firms and academics alike.
However, the general principles reviewed here can be adjusted and applied in varying “doses” to most deals.
