Why culture slips down the M&A agenda
Our experience of integration, why it happens and what tends to follow
Over the last few years of working with organisations on M&A integrations, we’ve noticed a pattern.
In the first few months, the focus is on the practical side of merging and operating two businesses. The organisational design model is drawn up and plans are made to merge IT, finance and people systems. Customer relationships are actively managed and the day-to-day practical issues are addressed for colleagues.
In the mid-term (around 6-18 months), whilst much of the integration work is well-underway, another set of issues start to surface. Engagement drops, a few high-profile colleagues decide to leave, cross-function collaboration feels harder than it should, and decision-making is slow. Customers and clients who were promised a smooth transition are struggling to see the benefit.
When we ask the leadership team and what has changed, the answer often relates to people: unclear ways of working, strained relationships, a lack of direction and change fatigue.
This is the essence of cultural integration - focusing on the people experience that shapes beliefs, behaviours and performance in the long-term.
It’s also an area that’s hard to prioritise.
Why culture slips
Why does ‘culture’ seem to be an after-thought? Why does it drop down the list of priorities relative to other integration activity?
Based on 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 need to be assured, regulatory commitments have to be met, and targets have been promised to investors.
By contrast, culture appears less urgent. 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 is often placed 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 a lower priority as it’s weighed up against operational workstreams that are often 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 too big, so that nothing can be done about it. These beliefs can be deeply rooted and far reaching. The consequence is often a quiet resistance that may not be realised until it’s too late.
In this case, it’s important to engage leaders in what really matters: the connection between experience, perception, behaviours and performance.
The mid-term challenge
We are often approached by organisations who are struggling with the mid-term challenge - usually around 6-18 months post integration, where there are presenting issues relating to people & performance.
It shows up in different ways:
A conflict between teams or individuals becomes hard to resolve.
Collaboration across functions isn’t happening.
Engagement scores drop, and there are murmurings of ‘change fatigue’.
Customer experience starts to feel disjointed, as colleagues from both sides navigate unclear ways of working.
High-profile, talented or influential people decide to leave, sending 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 what’s missing is a shared understanding of the beliefs, values and behavioural norms that shape everyday interactions.
So what?
The reframe that we find 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 how people and customers feel connected to the combined business.
It requires a joined-up conversation about three strategic levers:
The market ambition (value to customers)
The operations (value in efficiency)
The people & culture (value in behaviours)
Where we have seen organisations commit to cultural integration at the early stages, we’ve also seen them benefit later down the line - and the focus becomes about celebrating the value of the combined business, rather than fixing a set of unexpected issues.
What research suggests
This is not just our observation. Our review of academic research identifies the challenges of integration and the impact on value. We’ve turned this research into our People-First approach, an evidence-based framework that drives cultural integration.
Interested in cultural integration during M&A?
We’d be delighted to have a chat about the role of people & culture in value creation.
