Inviting Culture to the M&A Table
An unhealthy culture can erode a company's value. Take these steps to prevent it.
As you look to maximize your investments, keep in mind that each organization’s culture plays an integral role in the success of a transaction. And it can’t be an afterthought. Culture must become a major player at the M&A table with finance, legal and human resources.
Begin During Due Diligence
Each company’s culture should be assessed during due diligence as a critical piece of the financial puzzle. Imagine that you’re looking to buy a classic car. You find one that looks like it’ll be a good investment—nice to drive for a while and then sell for a profit. It looks great from the outside. But you know it’s the mechanics—the inner workings—that will affect the value. To relate that to your dealmaking, youracquisition is that collectible car and included under the hood are the business’s workforce and company culture. If those are out of whack, you may only be getting an overpriced shell of a company. An unhealthy culture, paired with an immature infrastructure, can degrade a company’s value, becoming a money pit filled with unplanned costs that weren’t part of the initial financial model.
