The global volume of mergers and acquisitions was rebounds throughout 2024 with an increase in the total variety of transactions by 6% and the value of transactions by 23% in the first three quarters of the 12 months, and forecasts for this 12 months they are even stronger. However, if latest statistics regarding worker departures as a results of a large transaction are correct, roughly half (47%) of the employees of acquired corporations will leave before the end of the 12 months. 75% of employees will leave in the next three years.
This is often something in M&A that may not talked about in conversations about operational synergies or strategic assets. The fact is that the financial points of the transaction are only a part of the equation. While these metrics get most of the attention when acquisitions are announced, culture and talent are the real X-factors that determine how effectively each corporations will work together once the deal closes.
Unfortunately, these people-centric variables are a bit tougher to quantify, which is why many acquisition teams often don’t pay enough attention to them. However, for those that want to extract maximum value from a deal – and avoid a costly revolving door of talent – the only solution is to give cultural and talent compatibility equal weight with financial considerations when it comes to determining the success of the deal.
Perfecting the art and science of assessing cultural fit and convincing finance and transaction teams that they need to be front and center in every decision we make is my mission and a key a part of our acquisition plan. From January 2023 to the present my company, Thomson Reuterhe did a series of takeovers a total of $2.83 billion.
In my case, these acquisitions are a part of the strategic transformation of my company from a holding company with controlling interest in several different subsidiaries to an operating company with a more synchronized product portfolio and streamlined infrastructure.
This meant that the company was no stranger to acquisitions, but the idea of fully integrating these acquisitions into one unified corporate structure – where a common purpose and a strong culture were essential – was a latest concept.
Here are some things I learned along the way.
Develop key metrics to measure cultural security
For a concept like culture to truly connect with finance teams and other business decision makers, it needs to be quantified. In our case, this meant taking stock of the value of the acquired talent for our business goals.
We have determined that roughly 13% of our overall workforce consists of acquired talent; many of them are senior leaders responsible for leading key businesses. By using this number as a benchmark, we were able to illustrate the business value of worker retention.
Find the “why” of your organization’s leadership
All acquisitions start with great products. But it’s often the details of those products that shed light on a company’s culture.
By asking founders and senior leaders why they create their products, how they developed them, and what challenges they encountered along the way, we learn a tremendous amount about how these corporations operate and whether their goals and values will align with ours.
This level of insight also helps the acquiring company learn from incoming talent and best practices established inside the acquired company. Ultimately, this deeper understanding of the motivation behind individual products and solutions helps acquiring corporations build best-in-class practices that evolve and develop over time.
Don’t ignore the elephant in the room
It’s vital to assess the company’s culture before greenlighting a deal, but once a deal is announced, it’s equally vital to be sensitive to the existing culture of the goal company and openly acknowledge employees’ very real and often very personal concerns. At the end of the day, when the company you’re employed for is acquired, the first query each of us will ask ourselves is: How will this affect me?
It’s vital to answer these questions straight away with open, transparent communication that gives real answers and opportunities for ongoing monitoring.
Plan, communicate, repeat
Nobody likes surprises — especially when those surprises involve changes to a profession they’ve spent a lifetime building. It is vital that acquiring company leaders clearly outline their plans at every stage of the integration process and beyond, communicate those plans to all employees, and listen and respond to their feedback.
Predictability, credibility and accessibility are the keys to ensuring talent feels secure, and this is essential when trying to build a long-term talent retention strategy.
Ultimately, when you think about mergers and acquisitions, there is little doubt that culture is a key a part of the equation. People are the fuel that makes this growth possible, and if you wish your acquired company to proceed to succeed under latest ownership, people are essential.