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How Organizational Culture Impacts Mergers and Acquisitions

We are first and foremost an acquisition company. Our sole reason for existence is to gather together small businesses under our umbrella and help them find synergies amongst themselves. How can they help each other grow? And how can we, at Pluribus Technologies, help them without interfering with the great work that they do? We have a responsibility to ensure the companies we acquire succeed. But how do we do that? The answer starts with culture. Because culture can be a make-or-break factor in whether or not a business acquisition ultimately succeeds.

But how does one define company culture? Your company culture is loosely defined as the explicit and implicit values of an organization and its people. One could also say it represents the processes, policies, behaviors, and procedures adopted based on those values. Culture is not a monolith. It is composed of many different aspects of your company. And it has a big impact on the overall functioning of your organization.

Culture has a tremendous impact on how people go about their daily work. It governs the social cues people use to interact with each other and achieve the company’s goals. And in the end, it is often what differentiates two companies that offer similar products or services. The health of a company’s culture can make a big difference in how well a new employee integrates into a company—and how well two companies fit together. It can mean the difference between market domination and bankruptcy.

Company culture can be broken down and analyzed by using the following questions:

  • What does your company invest in?

  • What do you reward your people for?

  • Are your decisions based on actionable data or raw instinct?

  • Are team-based decisions based on a collaborative effort or do you operate using a strict hierarchy?

How culture and company acquisitions intersect

Culture has an especially huge impact in merger situations—when two different businesses fold into one. If the company you’re acquiring has a vastly different culture from yours, it may be difficult for employees to be productive as they struggle to adjust to new expectations and ways of doing things.

Even if your stated values are similar, you can run into problems if you approach them in different ways. You might both value providing a great customer experience, but if one company achieves that through solid processes and the other achieves it by empowering employees to do whatever they see as necessary, you’ll end up with conflicting approaches and confused staff who don’t know what to do. This can be problematic even in work between acquired companies.

Because at Pluribus Technologies, we don’t absorb our acquisitions into Pluribus. Instead, we help them flourish within their own unique cultures. Yet, the culture within those companies must be symbiotic. As we build a family of companies that enhance each other, they must all have shared values. When it comes to our acquisitions, there is a minimum cultural expectation.

There are common pitfalls to avoid. One involves companies focusing on all the ways they’re similar and end up underestimating the amount of work required to bridge the differences. How can that be avoided? Culture audits are one option. A thorough culture audit of both companies as part of the pre-acquisition assessment process is key. Why? Because it can be difficult to identify and evaluate your own culture objectively. Neutral third parties can be used here to bridge the gap.

Culture is an asset, just like facilities, intellectual property, customer relationships, and employees. If you handle culture well, you can achieve great things. And that’s exactly what we are doing today within the Pluribus Technologies family. Get ready for more great things to come!

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