70-90% of takeovers fail worldwide – and often it is because the acquirer and the acquired company do not get along. Buyers should educate themselves about the culture and values of the company they’re considering buying from the start to understand if there’s cultural compatibility – and to figure out how to reduce friction.
Last year, second-hand fashion retailer Vinted took over its Dutch competitor United Wardrobe. In our Startup Life newsletter, we asked Kinda Dalla, M&A integration manager at Vinted, for her top tips on aligning teams and cultures post-acquisition.
Understand what drives the company you are buying
Set up meetings with the leadership of the company you are buying and ask: What is the company’s overall goal and right to exist? Where does she see herself in the next five years? What is the structure of a larger company like? What are your goals after the takeover? You can then use this analysis to create a plan for how to integrate the team into your organization – who will work with whom and on which team or project – based on their areas of expertise and interests.
Also get to know the corporate culture. And do this as early in the process as possible. Ask the company how they define their culture, what common traits their employees share, and what aspects of their culture need to be preserved after the acquisition. (This can be anything from weekly team meetings with the CEO to biannual offsites.) This information will help you understand which aspects of your culture align and which parts may cause friction.
Make friends with the person (or people!) running the business you are buying
Long-term success in M&A starts with two teams working together to create a vision for the future of the company – and for that you need the approval of the company’s founders. Get the founders of both companies to meet and get to know each other early in the discovery calls without a ton of other voices in the room. Include the acquired company’s founders in all workshops and discussions about the new team mission, organizational design and integration approach to ensure their input throughout the process. This helps build trust from the start.
Deliver the news to the acquired company in person at their office
Both company leaders should jointly announce the news and share what’s next after the merger — as well as the plans they have for the company’s future. Of course, announcements should also be made to the buyer’s team also planned In a similar way.
Introduce teams to each other as soon as possible
In general, confidentiality constraints limit your ability to notify your company of the transaction before an acquisition is complete. However, once the deal is closed, bring teams and/or departments together. At Vinted we are planning a mix of live and remote onboarding and induction sessions to give the new teams a warm welcome. We also assign each new colleague a buddy – someone with whom they can raise concerns or ask questions. We also organize corporate/department/function level events and invite the acquired company’s teams to Vinted’s celebrations such as our annual summer party, company birthday party and Christmas parties. These give employees the opportunity to get to know each other on a personal level in a less formal setting.
Plan a big celebration
Ultimately, cultural integration is about both sides adapting to a new situation, meeting new team members, and celebrating a new culture. After the deal closes, plan an entire company party with your new colleagues to send a positive message about the acquisition and create a sense of togetherness. It can also be worth scheduling offsites for individual teams so they can spend time together outside of the office. The format could include educational, strategic planning or knowledge sharing sessions and of course some social events such as drinks and dinner.
Speaking of which… integration of a new team
👉 Don’t make these mistakes. M&As often fail because key people leave, teams don’t get along, or the acquired company becomes demotivated. That’s how it’s done Avoid these pitfalls.
📖 Do your cultural diligence. That means understanding cultural differences between your own business and the business you are acquiring before a deal is struck, to try to iron out any difficulties.
📣 Take a stand. Founder of the acquired company should be clear what aspects of their culture and the product they worked so hard to build want to remain intact after the acquisition.
🤝🏽 M&A integration 101. This article describes what happens when two companies merge and who is responsible for managing the integration of teams and cultures.
🙋 Don’t neglect your team’s fear. Address everyone the changes they are confronted during integration.
Miriam Partington is Sifted’s Germany correspondent. She also covers the future of work, co-authors Sifted’s Startup Life newsletter and tweets from @mparts_