In our prior articles in this series, we discussed integration planning and process.  We now take a look at the softer side: the cultural and communication missteps that often sink a successful acquisition. 
 
•Do not underestimate the impact of cultural differences.  While corporate culture is an amorphous concept, it cannot be ignored.  Particularly in technology and services companies, except in those rare occasions where the acquisition is merely a product line transfer, you are buying the future earnings of a group of people.  Retaining, supporting and ultimately fully integrating those people into the acquired company is essential to achieving the business objective.  We have seen a higher probability of success in integrations where the acquired company’s culture is objectively assessed and elements of that culture are preserved. 
 
Cultural sensitivity is especially important where revenue growth is a key objective of the acquisition.  It is critical to develop a thorough understanding of the acquired company’s culture and find points of intersection and support with the acquirer’s culture.  Companies that take a “my way or the highway” approach often show progress in the early part of an integration, but ultimately suffer much higher turnover than their peers.  If you really see nothing in the acquired company’s culture that is worth preserving, you should ask yourself why you are doing this acquisition.
 
•Make, announce and implement tough decisions quickly. Every merger or acquisition involves a series of tough decisions. Management roles must be defined, reporting structures must be solidified and restructurings, often involving layoffs, must be implemented.
 
Any delay in announcing these decisions will have a profound impact not only on the people directly involved but also on the entire organization. These decisions, once announced, must be implemented quickly, ideally within days of announcement.  When the company has begun the integration process during due diligence, it is in a position to announce and implement personnel changes as early as the day of the closing
 
Another common problem in acquisitions is the tendency to find justifications to delay integrations of acquired companies due to real or imagined timing problems.  Delay just exacerbates the uncertainty that people feel and reduces productivity. 
 
In this series of articles, we have discussed five rules for acquisition integrations.  In many ways, the acquisition integration process is an endless number of short-term decisions with long-term consequences.  The companies that follow the principles we have outlined, and keep a clear eye on their long-term objectives for making the acquisition, will increase the chances they will beat the odds and build value through a successful acquisition.
 

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David Wolf is a Managing Director of The Mercator Group.  David can be reached at dwolf@mgboston.com