Mercer M&A survey reveals culture issues derail transactions

Mercer survey reveals that culture issues derail M&A transactions at an alarming rate

Mercer survey reveals that culture issues derail M&A transactions at an alarming rate

  • 14 November 2018
  • United Kingdom, London
  • 100% of UK respondents would consider leaving a job, if it was not a good cultural fit for them.
  • 61% of respondents selected “How leaders behave, not just what they say” as the number one driver of organsational culture

Mercer, a global consulting leader in advancing health, wealth and career, and a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), revealed that 43% of M&A transactions worldwide experienced culture issues so serious that deals were delayed, terminated or purchase prices were negatively impacted. In addition, 67% experienced delayed synergy realisation due to culture issues (See figure 1). These alarming insights come from Mercer’s M&A Readiness Research™ series 3.0 report, “Mitigating Culture Risk to Drive Deal Value”. The research features survey and interview responses from more than 1,400 M&A professionals based in 54 countries, who collectively have worked on more than 4,000 deals in the past 36 months on both the buy and sell sides.

“If the global deal making community intends to drive economic value for shareholders in M&A transactions, our research is crystal clear; culture matters,” said Jeff Cox, Mercer’s Global M&A Transaction Services Leader. “When looking to transform the workforce for the future of a newly formed organisation, simply ignoring culture is not an option.”

Additional findings from Mercer’s “Mitigating Culture Risk to Drive Deal Value” report include:

  • 61% of respondents selected “How leaders behave, not just what they say” as the number one driver of organisational culture.
  • “Governance and decision-making process” (53%) and “Communication style and transparency” (46%) also ranked highly.
  • Deal makers also said that 30% of deals fail to ever achieve financial targets, due to such culturally-related issues as productivity loss, flight of key talent, and customer disruption.

The report also extensively examines some of the varying attitudes and opinions of respondents based on role, industry, demographic and geography. For example, Human Resources professionals rate “collaboration” (69%) and “empowerment” (64%) as the most important components of culture, whiles executives rate “governance/decision-making process” (60%) as the most important.

Organisational culture is extremely important in UK. 100% of respondents would consider leaving a job, if it was not a good cultural fit for them.

“The research has shown that paying attention to the cultural dimension is especially important in the UK context, which is consistent with our observations on numerous M&A integrations” said Phil Shirley, Mercer’s UK M&A Transaction Services Leader.  “If we dig deeper into the data it is clear that leadership behavior is seen as a key driver of corporate culture in the UK and needs to be considered carefully on all deals where people are critical to success.”    

While alerting the global deal community to the culture risks endemic to M&A transactions, the report also offers definitive action steps as to how to best mitigate culture risk, including a three step plan (see Figure 2):

1 – Clearly articulate deal objectives and risks

2 – Insist on confirmatory cultural diligence

3 – Prioritise culture, especially post-signing through first 100 days

“Deal makers can mitigate M&A risk and drive deal value by putting culture at the center of business transformation,” said Mr. Cox. “Culture is a firm’s operating environment. It defines an organisation, allows effective change of business strategy, and can provide a platform to attract and engage the right talent.”

To learn more, please visit www.mercer.com/culture.

Notes to Editors

Figure 1: Culture is a significant disruptor of global M&A transactions

 

Figure 2: There is a clear path to mitigating culture risk in M&A

About Mercer

Mercer delivers advice and technology-driven solutions that help organisations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With nearly 65,000 colleagues and annual revenue over $14 billion, through its market-leading companies including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer. In the UK, Mercer Limited is authorised and regulated by the Financial Conduct Authority.

 

 

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