The Best Start is a Quick Start… But How?

Quick Starts are critical for integration success

In the high stakes environment of final negotiation and closing, there's not much oxygen left for early integration planning, the kind most advisors would say are so important to deal success. Yet important questions generally come pretty soon after a deal is announced. Having the right answers and being consistent in your leadership greatly improves your ability to get full value from an acquisition.

Getting critical integration steps started isn’t just a question of getting your team to do it. There’s a business to run – two businesses actually. Customers need to be sold and served. Employees need to keep focused on their objectives. Then, there are questions about what the deal means – to employees, customers and shareholders. Getting agreement on the right answers requires collaboration and discussion. So, while the value of a fast start is apparent, the time it seemingly demands is hard to come by.

Quick Start was designed specifically to create the foundation for a successful integration while also preparing leaders to communicate clearly and confidently about the transaction. It is our methodology for rapidly answering the critical decisions that attend any acquisition or merger. It engages leaders on both sides in addressing eight areas of concern for employees, customers and shareholders. The approach can be tailored to any situation, but is characterized by urgency and focus, both of which are required to develop a comprehensive plan with full leadership and organizational support.

Click below to download a 4-page PDF describing Quick Start in more detail.

Webinar: Getting Culture Fit Right in Post-M&A Integration

For many years, culture clashes have been blamed for the frequent failure of acquisitions to deliver their promised value.  We believe that culture is one of the keys to unlocking lasting M&A success. Leaders and dealmakers need strategies for minimizing risk and maximizing upside potential by dealing effectively with culture.

Last week, we had the pleasure of co-presenting a webinar on this very topic with JP Laqueur from Brand Foundations.  More than 100 people registered and we spent an hour discussing culture’s impact on M&A success and how it can be used to de-risk deals and maximize upside.

We showed how culture plays a critical but often-overlooked role at every stage of the M&A process, from due diligence to planning to integration.  We then reviewed two simple but effective tools for building and harnessing the power of an integrated post-merger culture:

  1. CultureTalk: An employee survey tool that quantifies an organization’s cultural character or archetype, identifying potential areas of conflict or connection when bringing two or more groups together.
  2. Purpose-Way-Impact: A messaging and communications framework that provides a more concise and inspiring way to convey the rationale for a deal and create alignment among all stakeholders.

We even conducted a “living case study,” applying both tools to the current Amazon-Whole Foods integration to show where those two cultures are likely to clash and highlight how leaders could create a shared narrative around common ground.

The presentation was followed by a robust Q&A, and we know the subject struck a chord with participants as we continue to receive incredibly positive feedback, including:

“Excellent job on the webinar!  Loved the examples… really brought your points to light.” 

“Some great ideas emerged for me. Specifically, a way of helping (my F50 client) thru an internal merger of two departments.”

“Excellent webinar today on mergers and the need to consider culture compatibility. Thank you.”

“Great webinar! I now have good context of how you are using tools like Culture Talk, etc. to guide successful M&A.”

Thanks to everyone who joined in! If you missed the webinar, request a link to the full recording here.


Do Compatible Values Predict M&A Success?

In many M&A deals, the similarity in values is an early sign to would-be acquirers of cultural compatibility. Culture differences are often cited as the third rail of M&A integration success, so having some comfort on that front is reassuring, to be sure.

Just last week, United Technologies’ Chairman and Chief Executive Officer Greg Hayes was quoted as saying, “UTC and Rockwell Collins share cultures of mutual trust and respect, accountability and teamwork that will allow us to work together to achieve our common goals.” While it remains to be seen if this is true, there are many situations where common values did not spare acquirers from significant cultural challenges. We have certainly worked with numerous organizations where a similarity in values was associated with conflicting models of leadership and, as a consequence, meaningful differences in company culture.

What does this tell us about values and culture? There are at least three possibilities. A common situation is that apparently similar value statements are associated with very different expected behaviors in the two companies. For instance, the common value of “treating people with respect” may lead people in one company to defer to the opinions of a recognized expert, while in another company the same value supports lively and open debate about decisions before consensus is reached. This is the challenge of alternative meanings.

A second possibility is that the values are aspirational. In this case, the leaders believe the values are important, and may even determine success, but the organization is not yet living up to them. This is a challenge of leadership execution.

Another possibility is that the value statements do not align with the vision of enterprise, but rather they are branding statements, intended to attract without driving any particular behavior. This is the challenge of “feel good” values.

So, caveat emptor is an appropriate caution. Are your values similar to those of your acquisition target? And are any of the challenges above at play to make the cultural picture more complicated?

Our solution is to take advantage of due diligence to dig into the values statements and understand better how the company translates them into action. Ask these questions of the CEO and several other leaders as part of due diligence. The picture you develop of the target organization will be a better reflection of the true culture of the place than the value statements alone might provide. Here are some suggestions for questions to make sure you have a good understanding of how the values operate in the potential acquisition.

  • Tell me about the value statements on your website. How were they developed? Who was involved? How long have they been around?
  • How do the values relate to your vision, your aspiration for where you want the company to be in 5 or 10 years?
  • When you say, “insert value statement here,” what specific behaviors are you expecting to see? (Do this for each value statement)
  • Give me a few examples of how the values have guided action or decisions at the executive level? (…at middle manager levels?)
  • Tell me about some occasions when people did not live up to a value. Describe the situation, the value at play, and how the organization responded.
  • What role do values have in hiring decisions? How does this work in practice? Can you give an example where values played a role in hiring someone that might not otherwise have been hired? (… or played a role in deciding not to hire someone.)
  • Are the values weighted significantly in employee recognition and in determining rewards? Describe how this works in practice.

Most companies won’t call off a deal due to differences in values or culture, and you probably won’t either. These differences need not scuttle a deal, nor do they portend a poor integration. Instead, the contrasts you see when probing at this level should open up early avenues for discussing culture, culture differences, and how to address them, before you close the deal.

Telling Stories: The Antidote to Culture Clash in M&A

Speaking about culture in the context of an acquisition, people are often on the defensive. Employees in the acquiring company generally believe their culture is good, or at least that it need not be changed to accommodate an acquisition. Those in the target company are fearful about the impact of impending changes that might challenge their long-held cultural norms and values. On both sides, people tend to defend the culture they know, and conversations about culture tend to be unproductive.

Defensive discussions about culture are often conducted with the tone of an imperative that makes them hard to question. As one CEO recently told me, “We are controlling. We have to be controlling because our industry is so regulated. We could be in a lot of trouble if our people do something wrong.” Statements like this above are hard to challenge, particularly when coming from the CEO. Instead of creating more understanding, for example by asking the “five whys,” those who hear statements such as this tend to accept them at face value.

Ironically, this company had just bought another, one that was also in a highly regulated business. But this one operated with a completely different culture, one defined in part by collaborative problem solving. In that organization the CEO and leadership team had granted considerable autonomy to those closest to the work to devise solutions to client related issues. Each organization believed its culture to be essential to its success. It took many months for the initial prejudices and fears about the cultural differences in these two companies to lessen. Meanwhile, a lot of energy was consumed in struggles over culture, especially in the upper management ranks. In general, uncertainty around culture induces a drag on progress during post-merger integration, just when it is especially likely to come with a high cost.

We believe there is a simple solution to this problem, but first let’s look at the relationship between culture and performance


Organizational Culture

Culture is, in the words of one of its foremost scholars, Edgar Schein1,

“A pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered valid and, therefore to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

The culture we experience in an organization is a snapshot at a point in time along a journey that leaders and employees are experiencing together. It is the result of learning from what worked and what did not as the company developed and prospered.

It follows that culture is directly linked to the organization’s performance. Most strategic acquisition targets today are superior performers, and the culture they exhibit delivers this performance. So understanding this linkage is essential for acquirers, lest they inadvertently destroy what made the target company a good acquisition in the first place.

Misunderstandings around culture are often blamed for M&A failures, but we believe that the issue lies elsewhere, in the realm of conversation and communication. We believe that the solution to culture clashes isn’t defensive talk that reinforces the status quo in each organization. What we need instead is to tell stories that get to the deeper assumptions and beliefs that drive behavior and results. That brings us back to how we speak about culture.


Telling Stories

There are many opportunities throughout the life cycle of a deal to tell stories about culture. Telling carefully selected stories from an organization’s past helps to describe not only the different dimensions of culture – behavior norms, assumptions, and the like – but also the logic or pattern of events that led to the norm or assumption being widely held. Here are several ways to use stories to explain the relevance of one’s own culture:

Acquiring firm leaders ought to begin by making obvious the connection between their own existing culture and its consequent impact on performance. In addition to the practical value of this exercise, it makes the leaders more open to exploring the culture-performance link in every potential acquisition candidate.

Then, during due diligence, selected interviews should focus on understanding the same mechanisms in the target company. If an acquisition agreement is signed, leaders of both companies can come together to reveal more of the underlying beliefs and assumptions that are expressed in each company, sharing with each other the specific historical experiences that led to these beliefs becoming dominant.

Later still, integration planning should include discussions about the appropriateness of the current cultures to the mission, vision and strategy of the combined company. This might lead to a determination to shift the culture in some ways over time to better support the strategy.

Meanwhile, the development of a common set of values and expected underlying behaviors represents another opportunity for meaningful discussions about culture and its impact. After deal closing, these discussions can be expanded to all employees as one part of the integration effort.

Exchanging stories will strengthen the ties between people, reducing resistance to change and greatly improving the odds of generating growth synergies that are otherwise hard to realize in an acquisition. Doing any of these well can have a tremendous impact on acquisition success. Doing many of them is the kind of commitment that sets the most successful acquirers apart.



The key to avoiding the negative drag of cultural uncertainty is to discuss the topic early, openly, purposefully, telling and listening to stories of the culture creation journey. Once exposed to the stories, the underlying reasons for observed behavior in the other organization, individual anxiety falls, mutual understanding increases, and the integration process moves forward with more collaboration and greater respect.



1Schein, Edgar H., Organizational Culture and Leadership, 4th Edition, 2010, p. 22.


The Missing Intent in M&A

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.

Read the article here.

Build a First Quartile Integration Capability

Before we started Acquisition Solutions in 2014 to focus exclusively on merger integration, I wrote an article on building an internal acquisition integration capability. It came to mind recently as a number of people have called to discuss establishing just this kind of capability in conjunction with an acquisition that was on the horizon.

The dynamic of combining two or more companies calls for capabilities that are not usually found in any of the usual process improvement or change management approaches. What is missing from these frameworks, and what is essential to successfully integrating an acquisition, are elements that successfully engage employees.

Click here to read the three ways to improve M&A outcomes.

How Strategic is Your Deal?

The stock market is quick to judge the strategic value of a deal, sometimes for better and sometimes for worse. If the strategic intent makes logical sense to observers, and adds value to the corporation, the buyer may well be rewarded by the market.

Download this short newsletter called “How Strategic is Your Deal?” by clicking on the text link below:

Strategy Newsletter April 2016 Strategy Newsletter April 2016 COVER-page-001

Integrating a Merger or Acquisition: Executive Committee Discussion Topics

Most senior teams understand that M&A transactions present huge demands and require a different kind of leadership than their day-to-day experience usually entails. In particular, balancing “hard” and “soft” leadership issues requires some objective assessment in light of the impact of the combination on both organizations. Here’s a balanced list of discussion topics for the Executive team to get the process off to a good start. Depending on scope and size of the deal, this could be covered in a single meeting or in a series of meetings.


Acquisition Strategy

  • Are we sure that a strategy of growing through acquisition will deliver value to shareholders? What risks do we see in accomplishing this?
  • How will the currently proposed deal deliver value?
  • What will be different in one year if we are successful?
  • In what ways will our organization be challenged to deliver on the promise of this deal?


Operational Integration

  • What plans will we make before deal closing?
  • When will we make these plans?
  • Who should we involve in the planning process?
  • Which integration elements should move most quickly, and why?
  • Do we have the people and senior leaders to make this acquisition a success?
  • In which areas should we proceed more slowly, and why?


Cultural Intentionality

  • What words or phrases do our people use to define our culture?
  • How does our culture drive superior performance?
  • What might we choose to improve about the culture?
  • What do we know about the target culture and how that has driven their performance?
  • What common culture of performance should we strive for during integration?
  • Which of their people are key to the value we want to deliver? What is our plan to retain target organization staff?



  • What have we learned about acquisition success from previous experience?
  • Have we included the potential benefits and challenges of acquisitions in our strategic planning process?
  • How will we incorporate the target’s leaders into our organization?
  • What messages are important to deliver about the acquisition?
  • What are our plans for communicating with key stakeholder groups?

What Drives M&A Performance?

What Drives M&A Performance?


We became interested in the measurement of post-merger success about 10 years ago. At the time, it seemed, everybody was convinced that most mergers were failures. Many articles on M&A, especially those authored by practitioners, point out their poor success rates. Academic researchers have been studying this question since at least the 1950’s, with more scrutiny and discussion each decade since. Numerous assessments prove that more than half of deals are failures. Even more, however, argue that the average deal is successful. These analyses are confusing to people who just want to know what to do to in order to succeed with their acquisition strategy or their next M&A deal.

While the debate goes on, more and more mergers and acquisitions are taking place. 2015 may top all previous years for global deal volume. Do CEO’s and company executives know something that the pundits do not? Why are the assessments we read about so conflicting in their conclusions?

Good News on Two Fronts

We assume you are, as are we, interested in better understanding the factors that determine success in mergers and acquisitions. If so, we need to generalize from what all the papers and articles are telling us. Most of the studies over the past 40 years have sought to shed light on the question, “Does M&A Pay?” Predictably, they vary a lot in design, and this has led to the lack of consistency in results. No single study purports to perfectly characterize all acquisitions. Some are aimed quite narrowly (e.g., benefits to being a frequent acquirer) and others broadly (overall economic benefit of M&A activity.) There are different measures of what constitutes success, different time periods studied, different sample sizes drawn. Taken as a whole, however, we know that the average deal pays off very well for the owners of the target company and pays off, if only a little, for the buyer. [1]

The two conclusions we draw from all of the studies are these: First, the average deal is not a failure. This contrasts with a lot of repetition about 70 percent failure rates that we see in the business press. More important, and this is where the opportunity lies, is that there is a very big difference between the top performers and those at the bottom.


Returns to Shareholders of Acquiring Companies

(Indexed to peer group)

Median and spread

Perhaps it should not be surprising, given that the individual assessments vary so much in their conclusions, that there would be a very wide dispersion of results, both positive and negative, around this small positive mean. What is of critical interest to us now, and what we can use to improve our current success rate, is to understand the drivers of this dispersion.

We believe there are four drivers of the performance differences:

  1. Acquisition strategy
  2. Operational integration
  3. Cultural assimilation
  4. Leadership competencies


Acquisition Strategy

Acquisition Strategy has two parts. The short-term component is centered around the logic behind any particular deal, including its relationship to the corporate strategy. A number of objective researchers have focused on specific individual determinants of deal success. Among the drivers of deal value for the acquirer, backed up with statistical support, are these:

  • Buyers who ensure strategic and operational fit perform better.[2]
  • Acquirers of companies in the same or closely related businesses perform better.[3]
  • Buyers avoiding “hot” markets and structured auctions perform better.[4]
  • Those who finance the acquisition with cash perform better than those who finance with equity.[5]
  • Buying private companies or subsidiaries leads to success more often than buying public companies.[6]
  • Acquisitions by small buyers perform better than those by large ones.[7] (This is hardly actionable by any one company, but the finding suggests that small buyers may take greater care, perhaps due to fewer resources with which to overpay.)


The long-term strategy behind growing through acquisition defines the broader purpose for making acquisitions given the company’s current market and competitive position and is grounded in a company strategy leading to success. Portraits of highly successful frequent acquirers such as Cisco or GE identify the approaches that have worked for them in the context of their respective competitive environments, over long periods of time. As far as we know, there are no objective studies across multiple organizations relating to best practices in long-term acquisition strategy.


Operational Integration

Numerous studies have identified integration planning or post-merger integration skills and experience as factors leading to M&A success. Some suggest this dimension is even more important than having a rational strategy.[8]

It is therefore satisfying to note that several studies, including those by Kenneth W. Smith noted above, have observed that acquirers have been getting better at post-merger integration efforts by managing them more like other significant change initiatives with standard processes, tools and disciplines, training of a cadre of people with integration experience, and careful choice of integration managers.

Taken individually, even collectively, these strategic and operational factors for success are significant. Statistically speaking, they do have an impact, but they are not particularly helpful in explaining the wide range of observed M&A outcomes. Why not? It’s because the ability to explain the wide dispersion in M&A outcomes is so small. For example, by one account, firm and deal characteristics only account for about 5% of the variability of results, and firm experience in making repeated acquisitions only accounts for another 6% of the difference in results.[9] It appears that quite a few strategic and operational elements need to be aligned well to ensure even a modicum of success.


Company Culture – The Third Rail of Successful M&A

While the requirements for M&A success are many, when corporate leaders are asked about the reasons for falling short of expectations, they are likely to point to one overarching reason: the conflicting leadership cultures of the companies involved. Organizational culture and leaders’ capabilities do not appear in the analyses of merger success because they are impossible to measure objectively and consistently from outside the organization. They are, however, recognized by insiders as the key cause of failures.

A CFO Magazine article[10] reported that incompatible cultures ranked first on a list of M&A integration pitfalls:

Top 10 Pitfalls

Source: CFO Magazine, April, 1996.

Subjective surveys of merger participants point to the people issues that drive poor performance – lack of information, resentment about losing a familiar culture, departure of trusted leaders, distractions associated with the integration.

Although large sample studies are not available, some business leaders are now beginning to describe how their own focus on cultural integration helped to ensure M&A success. Recently, Andrew Taylor, CEO of Enterprise Rent-A-Car, described in HBR how taking the time to learn from Vanguard, which Enterprise acquired in 2003, helped to bring two distinct and successful cultures together, build a new combined organization, and reduce resistance to the merger.

Robert Cooke has demonstrated that constructive cultures perform better than other types – specifically better than two defensive styles.[11] Constructive cultures are those where people are expected be achievement oriented, where they enjoy and produce high quality work, are supportive of each other and open to influence in dealing with colleagues, and are friendly and sensitive to the satisfaction needs of their work group. Cooke’s firm worked with integration leaders during the 2004 integration of Crystal Decisions with Business Objects. His article on the cultural integration focuses on the journey both companies took to create a new, common constructive culture despite differences in operating and communication styles and national cultures.[12]

The common themes in these examples are respect for the target company’s existing culture, openness to learning from them, and a commitment to creating a new culture out of the two that existed before the merger.


The Role of Leaders

It has been well established that leadership drives culture and that both leadership and culture drive organizational performance generally.[13] Why should this not also be the case in managing an acquisition?

Leaders also determine deal strategy, manage operational integration and determine the culture of an organization. Leadership, therefore, is at the center of M&A performance.

A Balanced Acquisition Framework

Balanced Framework

What kind of leadership makes a difference? Until recently, little objective academic research had looked at the impact of leadership capabilities on M&A performance. Our friend Keith Dunbar recently conducted what may be the most comprehensive evaluation to date. In his thesis, reviewed in the Harvard Business Review, he identified seven key managerial skill sets that are associated with first quartile M&A results for acquiring companies. Leadership teams exhibiting these capabilities, as revealed in the companies’ own 360 review processes, are highly likely to be successful in their M&A activity.[14]

1Q leadership skills

This set of required leadership competencies is almost entirely people oriented. In addition, the alignment of these skill sets with the attributes of a constructive culture (see above) is impossible to miss.

Not making the list required for first quartile M&A outcomes are the typical “executive functions” such as using sound judgment, thinking strategically, planning, driving for results, and managing execution. This may seem counter-intuitive to some. The analysis doesn’t say that these are unimportant; it simply says that they are not driving factors of first quartile M&A performance.



An acquisition or merger is one of the most challenging and potentially transformative actions an organization can take. It is easy to say that leaders account for the difference between successful and unsuccessful M&A results. Our challenge is to know what to do with this knowledge.

We do not believe a checklist of actions will be helpful for leadership teams wishing to improve their prospects for M&A success. Instead, we suggest that they discuss as a team how well they are positioned with respect to each of the drivers of a positive outcome – acquisition strategy, operational integration, culture, and leadership. A balanced conversation across these four dimensions will reveal strengths to be emphasized and weaknesses to be addressed. These questions might be helpful to get the conversation started. As with any change effort, leaders should focus on just a few areas for improvement at a time – two or three where making a lot of progress will be felt by the organization. The results will begin to be evident the next time you hold an integration steering committee meeting.



[1] Bruner, Robert F., Deals From Hell, 2005: John Wiley.

[2] Haspeslagh, Phillippe C. and David B. Jemisen,  Managing Acquisitions: Creating Value Through Corporate Renewal, The Free Press, 1991.

[3] Healy, Paul M.,Krishna G. Palepu and Richard S. Ruback. 1997. Which takeovers are profitable: Strategic or financial?  Sloane Management Review 38 (No. 4, Summer.)

[4] Sirower, Mark L. 1997. The Synergy Trap, Free Press.

[5] Loughran, T. and A. Vijh. 1997. Do long-term shareholders benefit from corporate acquisitions? Journal of Finance 52 (No. 5, December.)

[6] Moeller, Sara B., Frederik P. Schlingemann and René M. Stultz, Firm size and the gains from acquisitions, Journal of Financial Economics 73 (2004).

[7] Moeller, et. al., 2004

[8] Chakrabarti, Alok K. Organizational Factors in Post-Acquisition Performance, IEEE Transactions on Engineering Management Vol 37, No. 4, November 1990; also Smith, Kenneth W., as referenced by Alexandra Reed Lajoux and J. Fred Weston in Mergers & Acquisitions, October 1, 1998.

[9] Golubov, Andrey, Alfred Yawson and Huizhong Zhang, Extraordinary Acquirers, Journal of Financial Economics 116 (2015)

[10] Bureau of Business Research at Springfield College, Springfield, MA. Survey reported in CFO Magazine, April, 1996.

[11] (Retrieved December 2015.)

[12] (Retrieved December 2015.)

[13] (Kotter, J. P. and J. L. Heskett, Culture and Performance, The Free Press, 1992.

[14] Dunbar, Keith, The Leaders Who Make M&A Work, Harvard Business Review, September, 2014.