How do you define success when buying a company? People buy companies for a number of reasons: to
When in the midst of a merger or acquisition, it’s easy to get caught up in the financial modeling and forget about or minimize culture. Most executives will admit that corporate and work culture is the most important thing to consider. Yet when faced with the great opportunity of the combined financial model, many will still push forward even when the corporate culture of the two companies don’t mesh. They convince themselves that it is something they can fix after the merger. That’s a beautiful story. But they are wrong. The data shows that 70% of mergers fail. The temptation of potential financial success combined with optimism whispers in our ears, “You can fix the people stuff later… It’s going to be ok…”
People forget that making mergers work takes great execution. And we live in a P2P (People To People) world. Your ability to execute your desired strategy beyond the merger or acquisition is what decides whether you will convert those financial model dreams to reality or if instead they convert into nightmares. And there are many more nightmares than there are success stories!
So, how do you avoid this pitfall?
Here’s how you validate if your core values and the proposed acquisition’s core values will mesh well together:
When you are considering buying a company, don’t let the sweet siren sounds of the financial model seduce you. Have the discipline and courage to walk away when the core values and culture don’t seem to line up. You cannot have breakthrough execution without strong alignment of core values and culture. The gold may look great. But that’s what they say about fools gold, too. It looks great.
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