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4 minute read

Leadership

Here's What It Takes For Your Company's Culture To Survive An Acquisition

Integrating two companies' cultures takes forethought, a solid plan, and time.

[Photo: IR_Stone/iStock]

Your company's culture is what defines it. Small startup or large corporation, it's the set of values and attitudes that bind your employees together. So what happens to that identity when another company buys you out? Mergers and acquisitions can cause fear and confusion, usually leaving questions about the impact on corporate culture low down on the list of priorities.

Under a deadline to push a deal through, business leaders don't usually sit down to discuss how to head off a culture clash. That's a task that takes time, planning, and effort few seem willing or able to spend time on, but it's a process that can make the integration that follows either much more seamless or difficult to execute as a result.

Building On What's Similar

Negotiating a public acquisition without sacrificing culture is a scenario Coyote Logistics is all too familiar with. The transportation and logistics company began as one of several entrants into the freight brokerage business in 2006, but its technology catapulted Coyote to the top of a competitive market. With 2,200 employees, the privately held company was acquired by UPS in a $1.8 billion deal last year. That raised concerns among analysts who questioned whether UPS’s culture as a long-established player would mesh with Coyote’s more scrappy, startup spirit.

"It’s important to start with leaders who get what’s truly important," Jodi Navta, CMO of Coyote Logistics, tells me. "UPSers and Coyotes alike share an honest commitment to getting the job done no matter what. UPS acquired us for our ‘no excuses’ promise to our customers, carriers, and to each other."

As Navta explains, Coyote saw its own values—chiefly that "no excuses" spirit—reflected in UPS's culture. So one key to the acquisition was for both companies to amplify each other’s success stories through their respective team's shared intranet. The goal wasn't just to get everybody clear on the new processes involved in working within UPS, but to let both teams build a culture that could continue to support their clients, partners, and one another.

Strong leadership and communication on both sides, Navta says, helped Coyote navigate that challenge without surrendering its identity. It helped that the groundwork was already in place. For a few years prior to the acquisition, Coyote played a growing role in supporting UPS peak operations, so UPS had already seen the value in Coyote’s culture firsthand.

Draw Up A Plan

Corporate culture is often seen as a "soft" attribute—something that can't be strategized or mapped out. But that assumption tends to work against both companies in the midst of an acquisition. One key to merging two distinctive cultures is to create a plan with clear objectives. Otherwise cultural problems can begin to undermine value creation and lead to falloffs in productivity.

Start small. Talk to your employees to identify their top concerns over an acquisition. Brainstorm some ways to keep the best aspects of both cultures intact, always looking for points of commonality. And over-communicate—every employee needs to understand what goes into an acquisition and what they should expect, and as those details change, team members need to know how and why.

Before an acquisition, managers with extensive cultural knowledge about their own organization should assess the culture of the company they'e acquiring. That means conducting interviews with employees. The idea is to gain a better understanding of the company’s strengths and weaknesses, and any fears or doubts an employee may harbor toward an acquisition. You need to apply the same rigor to your due diligence on the cultural side that you would on the financial one.

Applied Predictive Technologies was acquired by MasterCard (a public company) in 2015, and according to the Washington Post, the company worked hard to maintain transparency and constant communication so employees understood how the acquisition would impact their day-to-day activities. Because that was part of the plan, it was easier for the company to deliver.

Earning New Employees' Commitment

If the goal is to retain all the employees from an acquired company, the public organization also needs to secure incoming employees' brand loyalty.

That doesn't happen overnight. Declaring to employees of a newly acquired company that they're about to become part of a big corporate entity might not sit well with those who deliberately set out to work with a more entrepreneurial, startup-minded company. Those employees will have their own set of expectations that differ from the company that's going to acquire them. You need to listen to those expectations, address them, then give everyone time to settle in.

A public acquisition can spell great things for your business financially, but your employees—new and old alike—all need to be on the same page first. Culture doesn't just have to be a liability—something to manage. It can also play in your favor, as an effective tool for making the integration go more smoothly. You just have to know how to use it.

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