When culture slips down the M&A agenda
The pattern of integration, why it happens, and what tends to follow
6 minute read
Most M&A integrations we observe take a similar shape in their first year. The operating model gets attention first, as do finance systems, customer relationships, and the practical issues that surface in the first few weeks.
Six to twelve months in, a second set of issues start to surface. Engagement has dropped, a few high-profile colleagues have decided to leave, cross-function collaboration feels harder than it should, and decision-making is slow. Customers and clients who were promised a smooth transition, and greater value, are struggling to see the benefit.
When you sit down with the leadership team and ask what has changed, the answer often relates to people; unclear ways of working, strained relationships, and a lack of direction.
This is the essence of cultural integration – focusing on the people experience that shapes behaviours and performance in the long-term. It’s also the area that is hard to prioritise.
Why culture slips
It is worth being honest about why culture is rarely the first thing leadership teams focus on after a deal closes. From our experience, there are three completely understandable reasons for this:
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The operational demands of integrating businesses are massive. There are tight deadlines, limited resources, and high stakes. Systems need integrating, contracts need to be ported, customers to be assured, regulatory commitments to be met, and targets that have been promised to investors.
By contrast, culture is an afterthought. It is harder to measure, or act upon, and rarely shows up as an issue in the first few months. If leaders are prioritising based on value and urgency, cultural integration will often appear lower down the list.
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When culture comes onto the M&A agenda, it tends to arrive as “another workstream”, sitting on top of everything else that needs to be delivered. This guarantees de-prioritisation because the operational workstreams will always feel more urgent.
The organisations that do cultural integration well don’t think of culture as a separate workstream, but think of it as something that runs through every aspect of the integration. Importantly, this means it’s a shared responsibility across leaders and colleagues – rather than a job you assign to one person.
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The word ‘culture’ often comes with baggage. For some, it’s a word that gets over-used or reminds them of previous initiatives that did not land well. For others, it feels too abstract, with no clear definition or sense of control over it. Whilst these experiences and beliefs can be challenged, they can also be deep rooted and far reaching. The consequence is a quiet resistance to cultural integration work.
Alternatively, framing culture as the “people experience” of integration can often resonate faster. We’re able to describe the connection between the experience our teams have of the integration, to the way they work every day, to retention and engagement – and ultimately performance.
What we often see after 6 to 12 months
At this stage, the leadership teams we work with are not yet at the point of reflecting on what they wish they had done differently. They are still ‘in’ the day-to-day experience but noticing that something isn’t quite working.
What they bring to us tends to be specific:
A conflict between teams or individuals becomes hard to resolve.
Collaboration across organisations doesn’t quite happen as expected.
The value the deal was meant to unlock is described but not delivered.
Customer experience starts to feel disjointed, as colleagues from both sides navigate unclear ways of working in front of the people they serve.
Engagement scores drop, and there are murmurings of ‘change fatigue’.
Then, a handful of high-talent individuals the business really wanted to keep decide to leave. Often not the most senior, but the crucial influencers who got the job done. Their departure sends ripples through the business.
By the time these things are visible, the deal value that was promised at the outset is harder to realise, and the work that could have prevented it – cultural integration – is harder to do.
People rarely describe these issues as ‘cultural’ when they raise them. They describe them as operational, commercial or talent issues, each with its own apparent cause. But underneath, what’s missing is a shared understanding of how the new organisation operates and what it feels like to belong to it. That work has a name, even if the teams doing it don’t always call it culture.
What academic research tells us
This is not just our observation. Somewhere between 40% - 60% of deals fail to deliver the value they promised.¹
We’ve turned this into our People-First approach; a snapshot of the factors that make the biggest difference to M&A cultural integration.
So what?
The reframe that tends to be most useful is to stop treating cultural integration as something extra, and start treating it as part of how the integration is done from the outset. This makes a difference to every aspect of the integration; shaping how decisions are made, how leaders build trust, how communication happens, and the feelings of belonging and value that are created for people and customers.
Honestly, this is easier said than done. The consequences of not prioritising it will be realised much later, and by the time those costs are visible, they are harder to address.
The deals that go well are not the ones where the cultural work is done perfectly. They are the ones where it is prioritised alongside the strategic and operational work and treated as a lever for individual and organisational value.
At Spinnaker, we take a People-First approach to integration; an evidence-based, practical lens that brings the experience and performance of people into the earliest conversations of the deal.
Interested in cultural integration during M&A?
We’d be delighted to have a chat about the role of culture in value creation.
