Public Relations is a great tool for the Management of soft-issues in Mergers and Acquisition. Oftentimes, managers bother only about the hard-issues but value-attrition mostly occur when the soft-issues are not properly addressed.

1. MANAGEMENT OF
CULTURE IN
MERGERS AND
ACQUSITION
By Bolaji Okusaga
Managing Director, The Quadrant Company

2. What is a Merger?
 A merger involves the integration of all
products, services, processes, systems
and administrative functions of two or
more organisations to improve the
competitive positions of the
organisations.

3. What is an Acquisition?
 This is a structured transfer of one
organisation’s assets to another in an
agreed and orderly manner.
 The organisation acquiring is usually
referred to as “the acquirer”, while the
organisation being acquired is referred to
as “the target”.

4. Synergy Defined
WORKING TOGETHER
Combined action + operation
Greater Advantage
 This assumes that the collective advantage to
be gained by joining forces is greater than the
separate existence of each organisation.

5. THE M&A
2 PROCESS
Acquisition
Planning Phase Phase Integration Phase
PRE-MERGER
PHASE
POST MERGER
PHASE
Negotiation & Integration
Initiation Transition

6. Why do Organisations Merge?
The Hard-issues / Strategic Fit
Horizontal share Vertical have different
the same market niches within a larger
segment in the same industry.
industry. Advantages
Advantages  Expansion of product
 Expansion of portfolio
 Diversification of
Franchise / Market
product / service mix
share
 Enlargement of market
 Economies of Scale
scope and customer
 Dominance of market segments
segment

8. Mergers & Acquisition Failure
Rates
 Mergers and Acquisition have less than
a 50:50 likelihood of success
 Up to one-third of mergers fail within 5
years
 Up to 80% of mergers never live up to
their full expectations
 A 3-way or 4-way merger is
exponentially more difficult than a 2-way
merger.

9. Why do Mergers / Acquisition Fail
The Soft Issues
 CONFLICTS OF CULTURE – this usually
affects operations and processes
 MULTI – VISION – this affects
organisational strategy
 FAILURE OF LEADERSHIP – this leads to
the pursuit of self interest instead of the larger
organisational interest

10. Why do Mergers / Acquisition Fail
People & Culture Fit
 Corporate culture and existing value systems
 Staff qualification
 Core competencies and Intellectual Capital
 Leadership styles and communication systems
 Strengths and weaknesses of the critical
success factors of each business units
 These factors make or break
mergers and acquisition deals.

11. Why do Mergers / Acquisition Fail
Stakeholder Fears
THE SHAREHOLDERS : fear of a dominating
merger partner
THE MANAGEMENT: fear of loss of
position & relevance
THE STAFF: conflicts due to fear of
changes in middle
management

12. News of the Merger
Commitment to
The Situation
Denial Enjoyment
Fear Liking
Anger Interest
Sadness Relief
Acceptance

13. Pitfalls of the Transition Process
o “How is all this going to affect me”
o The personal / departmental list anxiety
o Organisational proliferation – emphasis on
temporary rules & reporting relationships at the
expense of the job
o Infrequent and Irrelevant Communication
o Triangulation – conflicting objectives & loyalties
6. Time management – balancing time constraints
with adjusting to the new reality
7. Leadership crisis

14. Checklist for an M&A
 What competitive advantages do we
have?
 In what market(s) shall the new
organisation play? What are the
strengths of the partners in the deal.
 Do the organisations fit together?
The vision and corporate
personality is not negotiable

15. Problems Associated With
Improper Cultural Integration
1. Realization of difference – the “them”
and us “syndrome”
2. Mutual stereotyping
3. Mutual blaming
4. Battle for cultural dominance

16. Fixing the Soft Issues in a
Merger & Acquisition Deal
Corporate Culture:
This is simply put: “the way we do our thing
around here”
Culture Mechanism Strategy Market
Values Structures Products Customers
Style Capabilities Delivery Competition
Reward Systems Shareholders

18. Cultural Due Diligence in M&A
 Cultural due diligence is imperative in
any M & A transaction because all
mergers and acquisition transactions are
human transactions; failures or
successes are therefore attributable to
the human factor.
 Explore the cultures of the organisations
involved in the deal as you explore the
financials and the legal implication of the
deal.

19. Cultural Due Diligence
Process
 Assessment Process involving three
core steps:
-Determine Current State
-Define Desired Picture
-Conduct Gap Analysis
 Determine appropriate alignment /
intervention initiatives
Tools: Culture Mapping
Climate Survey

20. Benefits of a Cultural Due
Diligence
 Gives employees clarity and sense of purpose
 Helps employees to view the integration as a
meaningful process
 Helps shift the focus from just getting the deal
done to making the partnership viable over the
long haul
 Helps employees to focus on similarities and
not differences
 Supports in the creation of a culture by design
and not by default

21.  Thank you