People are the missing piece in most mergers

When you acquire a company, you're not just buying portfolios, customers, systems and a brand – as challenging as that may already be. You're buying an entire organisation – with leaders, processes, employees, stories, culture, strong relationships – and difficult ones – memories and plans for the future.

The same applies when two companies or organisations merge. It’s exciting, but also messy. It usually leads to frustration and tough questions being asked of leaders and across the whole organisation. It often results in shelved plans and projects, as the newly merged organisation turns inward to work out a shared path forward.

This is well understood. That’s why most leaders already consider organisational culture as part of the due diligence process. That’s why they take care with employee communications. And why cultural differences are often acknowledged as a core challenge.

But unfortunately, that’s often where the focus ends. When it comes to the long, demanding process ofrealising the promised synergies, we tend to invest massively in system integration – and next to nothing in culture.

The result? Slower and less effective strategy execution. The results of many mergers end up contributing to disappointing statistics – not because the strategy was wrong, but because the resources and priorities weren’t aligned. And that’s a real shame, because if anything is tested during a merger, it’s the people and the culture – and it’s precisely these factors that can accelerate integration and determine whether it will be a success.

Take, for example, a successful start-up acquired to boost innovation. Preserving the culture that enabled that innovation is crucial. In contrast, mergers driven primarily to increase scale and market access are often less dependent on protecting multiple subcultures.

Who looks after the past, present and future?

At the point of integration, everything needed for a healthy culture is at stake – leadership, direction, stories, memories, plans, and a shared way of being together.

First, there’s typically a leadership vacuum. Leaders are affected too. They become uncertain, frustrated, and often entangled in the political manoeuvring that follows. When they should be supporting employees and communicating clearly, they are – understandably – preoccupied with finding their own footing.

Second, organisations often lack direction. While a high-level rationale for the merger has been shared, there is rarely a concrete integration plan. What does a ‘dual brand strategy’ mean in practice? Will one business suddenly need to outsource functions that were previously in-house? What happens to traditions like the company Christmas party? Without clear answers, employees either waste time trying to guess or stop initiatives for fear of getting it wrong.

Third, there’s a critical need to create shared stories and future plans. When organisations merge, they often lose sight of the future they were building – and their history is neglected. Former allegiances vanish, at least temporarily, and the risk of frustration and attrition increases. Agile, smaller firms are particularly at risk of being swallowed up by the bureaucracy of larger organisations and losing their unique edge.

And then what? The cynic might say: “That’s business. People can choose to stay or go.” But that mindset is rarely good business. It leads to lost productivity, random reprioritisation of projects, employee churn, lack of innovation – and a customer-centric machine that is far from well-oiled.

Three practical tips to get you closer to success

Mergers don’t have to be painful – but only if we invest in culture and people, not just systems.

Assign clear responsibilities – from start to finish

Cultural integration can’t be left solely to the leadership. It requires dedicated ownership by someone with time, expertise and the stamina to drive communication and change. The work doesn’t stop after the first 100 days – in fact, that’s when it really begins.

Support leaders to be strong role models

Leaders want to help their teams thrive – but in busy times, engagement and communication are easily sidelined. They need practical support, clear messaging and a safe place to ask questions. Especially when everyone else thinks the integration is complete.

Understand your history – and set out your future

Mergers always create new cultures and new futures. Define the desired culture early and build it on the strengths of what came before. You can only create a strong, shared future by recognising and harnessing the existing culture.

A company acquisition can be thrilling – especially for those close to the decision-making. But for many employees, it can bring frustration. And that’s costly – both for the people and for the promised gains that justified the merger in the first place.

Read the article in Danish at finans.dk.