Preventing Culture Clash in Business


From above image of business people make a deal and shaking hands while sitting at meeting.


Company culture is the root of a successful business and is the foundation that holds an organization together. Whether you are thinking about the succession of your business or planning an exit strategy, finding the right cultural match for your business is essential to a smooth transition. If continuing the legacy and ideals of your business is important to you- why bring on a buyer with priorities opposite from your own?

Why Does Culture Matter?

There are multiple factors that contribute to a thriving company, and culture is one of them. Sustaining the values and mission of your company while finding the right successor plays a key part in the company’s future. A business is subject to change immensely when a new owner steps in that is unfamiliar with the ideals and principles established over time by the original owner and his/her employees. It is easy for company culture to turn into a culture clash, and can result in negative consequences for many business owners unless it is properly addressed in the beginning.

According to a recent study, 30% of all mergers and acquisitions fail due to cultural incompatibility. If you are contemplating selling your business to a family member, partner, employee or a third-party buyer, you need to make sure that they are taking your company culture into consideration. This is especially true if you wish to maintain the core values instilled within your employees and partners. Business succession can be a tricky and emotional process, and finding the right successor can play a large part in the confidence you must maintain when walking away from your business.

Merging Cultures Successfully

Culture clash can be caused by a multitude of reasons:

  1. Differences on issues such as expenses and pay
  2. Lack of agreement on workplace formality
  3. Opposing behavioral norms
  4. Conflicting operating styles
  5. Opposite views on advertising and promotional strategies

These reasons can all lead to a failure in the merging of cultures. Steve Allan, EMEA M&A practice leader at Willis Towers Watson, accurately expresses the danger of culture clash. “Unaddressed cultural clashes are the most cited reason for deal failure which, without proper measurement warning signs, may be overlooked and could ultimately lead to a deal failing to deliver on its promise,” says Allan.

There are certain steps companies can take to decrease the chances of negative effects during culture merging.

  1. A buyer must consider the cultural aspects and business aspects of their merger or acquisition simultaneously.
  2. Investing time in learning and about a potential buyer of your business and how they plan to grow employee relationships and integrate leadership style is necessary before making a final decision.
  3. Using a set of practical tools for facilitating cultural integration is useful in mergers and acquisitions. This includes setting a cultural integration agenda that should depict behavioral norms, decision capabilities, competition, structure and governance mechanisms.

If properly handled, cultural differences can be a cause of creation in M&A. This is because differences between combining organizations can cultivate opportunities for advancement and learning. Cultural variation has the potential to break boundaries in acquiring firms, helping them to develop further wisdom and growth.

Culture incompatibility can be decreased dramatically if a professional intermediary is involved. Viking Mergers & Acquisitions will assist you in the entire M&A process to ensure a smooth transition for all parties. Call Viking Mergers & Acquisitions today to discuss how we can help you sell your business.