A corporate culture is the founding base of any company. It deeply affects the way its employees behave and how they commit themselves to their work. A friendly and a healthy cultural environment increase the employee efficiency and effectiveness incredibly. The culture of the company affects the decision-making styles of the leaders of the company, it reflects upon the leadership styles like dictorial or democratic. The culture affects the ability to work together as a team and defining of roles. Culture therefore affects all the aspects of the corporate functioning. It is also highly important when it comes to mergers and acquisitions.
Mergers, acquisitions and the clash of cultures
Before we come on to understanding that how cultural assessment is important to mergers and acquisitions, let us first understand what exactly mergers and acquisitions are. Strategic management has two major aspects these are mergers and acquisitions. Mergers and acquisitions are a restructuring activity that aims in providing positive value and growth to the organization. Merger is the legal consolidation of one entity where as acquisition is taking over of one country and establishing itself over the acquired one in all regards. Mergers are between equals where as acquisition is the purchase of one company by another.
Although corporate mergers and acquisitions are driven by corporate and economic growth, yet corporate culture directly influences the direction these take. Corporate culture affects the organizational behavior; it affects the economics as well as the financial position of the companies. Thus, it is the driver of corporate, mergers and acquisitions. Mergers and acquisition is not a new concept, it is practiced ever since the businesses were started.
Culture impact on business
However, it has gained a popularized interest lately. Culture integrates with all the field of business and it affects the decisions that are made in these fields. Organization culture influences the organization decisions in the regards of mergers and acquisitions. It is the culture that decides upon the various parameters of mergers and acquisitions. Culture drives the goals, strategy, mission, and communication and coordination that are involved in the procedures related to mergers and acquisitions. Cultural assessment has given the concept of culture due diligence, which when combined with the processes of mergers and acquisitions gives a strategic perspective to the entire scenario.
Finding cultural compatibility in businesses
Cultural due diligence is the process that assesses, investigates and defines the culture of two or more distinct business units. This practice is very effective for the process of mergers and acquisitions because it states how relatable two businesses are. This helps in measurement of the features that then become the founding base for the mergers and acquisitions of the various firms. It states what will be the effect of integration or acquisition in regards to the strategic objectives of the companies that undergo these processes. This approach measures all the quantitative and qualitative embodiments that play a vital role in mergers and acquisitions in order to providing value to the businesses and increasing the market share simultaneously.
A cultural assessment at the time of mergers and acquisitions measures the strengths and vulnerabilities of the firms involved and indicate the long-term effectiveness in synchronization with the organizational culture. In corporate regime, efforts are constantly recognizing the vital role of culture and people in the pre and post merger integration, which ensures the success of mergers and acquisitions that place at the corporate ends. Current culture is aligned to the ideal culture profile that states the areas that need to be worked upon. Thus, it can be started at the organization culture plays a vital role in defining the success rate of the mergers and acquisitions that take place in lie to provide a greater market value.
Organizational culture is a major factor as well as the measure of the mergers and acquisitions that take place at the corporate ends. It affects the decision making regarding the same and measures how effective the concerned program has been.