Culture, as we often hear, is the bogeyman of failed post-merger integrations (PMIs). Cultural incompatibility frequently is cited as the cause of deal failure – recall Daimler Chrysler, AOL Time Warner and others. These were unwound with great loss of shareholder value after cultural differences could not be reconciled. Because of their size and audacity, we remember them.
But unwinding of a big deal is not the main outcome of cultural differences for merging companies. Contrary to what we usually hear in the press, M&A deals, on average, perform about as well as other types of investment, and many ultimately deliver what was forecast. Escaping notice in much of this analysis, however, is the missing performance upside associated with underestimating the positive potential of cultural alignment.
Intentional leaders, such as Andrew Taylor of Enterprise Rent-A-Car, take an intentional approach to cultural assimilation that he calls Deliberate Integration.
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