Kayak PR | Public Relations Kingston

The Times

Another of our January highlights so far was seeing our client Stephen Archer, Director of business consultancy, Spring Partnerships, quoted in The Times about how companies can create a positive working culture postmerger.

As the article points out bringing two companies together is no mean feat. In fact, according to KPMG, 83 per cent of mergers and acquisitions fail to boost shareholder returns. One of the big issues for these business marriages is culture clash.

“Although mergers and acquisitions offer the opportunity to scale quickly and flex corporate muscle, they can also be disruptive as different teams are brought together,” says Lopo Champalimaud, chief executive and founder of online beauty marketplace Wahanda (pictured above with his management team). Wahanda acquired three companies in 2015. “The human implications are just as important as the financial implications.”

So what is it that rocks the boat when two teams merge? According to Stephen Archer, director of brand and performance consultancy Spring Partnerships, the dynamic of one organisation buying another can sow seeds of discontent.

“It puts the acquired company on the back foot if they assume changes will be expected on their side. This received wisdom can cause people to leave, making the company less valuable than when it was bought.”

As well as feared changes, real tensions – especially those that grow from having competing philosophies – cause people to head for the door. “Some teams are highly motivated by financial rewards, others are simply expected to do their very best,” says Howard Leigh, senior partner at Cavendish Corporate Finance, experts in mergers and acquisitions. “This is a place businesses often fall down.”

How can merging companies avoid coming a cropper on culture? A vital step, Champalimaud says, is to give a group of employees from across both businesses responsibility for the process of aligning the cultures.

“This new team first needs to define the cultural objective. They can then identify and build on the synergies between the two companies, and also spot the differentiating factors that need to be addressed. Clear communication and transparency are vital throughout the whole process.

Company culture is often underestimated as a ‘soft’ area, simply because it’s hard to measure, but it’s actually one of the most challenging things to get right.”


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