Is Your Merger Giving “Brady Bunch” Vibes? (Pt. 1)

Here’s the story of a lovely lady…

So goes the opening theme song to the popular 1970s American sitcom, The Brady Bunch. The premise of the show is that a widower with three boys marries a widow with three girls and they all live happily ever after…except, of course, for the culture clash that ensues. 

Sibling rivalry, dating issues, ignored responsibilities, and even miscommunication about caring for the family dog threaten to tear the family apart. In most episodes, the job falls to Alice, the humble, live-in housekeeper, to bring outside perspective and glue the family back together again.

Track Record of Failure

If merging is difficult for families, what’s it like for businesses? According to Harvard Business Review, companies spend more than $2 trillion on acquisitions every year, and the failure rate is an astonishing 70-90%. At stake are big dollars, brand loyalty, and the reputation of the executives making the deals. Despite the good intentions and how great the projections look on paper, most turn into a big flop. So why are so many mergers failing?

Why Mergers Fail

“Most acquisitions succeed on paper,” says Peyton Bowman, M&A Director at Sax, a leading accounting and business advisory firm in New York City. “But the probability of failing in the flesh increases if the soft skills in those first few days of integration are ignored.” 

One of the big reasons is that a merger is not just about margins and market share; it’s also about blending cultures. As the Bradys discovered, there are lots of unexpected people issues that crop up when two established groups are suddenly working together, and not dealing with them properly can make matters worse.

In this two-part article series, we look at the top seven challenges businesses face when merging two cultures.

Challenge 1: The Big Ego

Think about what a merger is like for the selling CEO (possibly a founder). Even though they agreed to the deal, and stand to benefit from its success, they now find themself in a new role: a follower. They are used to having lots of control, but their new role is to find a way to support the new organization, even if they disagree with some of the decisions. This can challenge their ego.

Whether it’s malicious or unintentional, negative attitudes and behavior from this key leader can send ripples of dissatisfaction and lack of trust throughout the entire organization. When that happens, the team becomes very difficult to lead.

And the ego problem goes both ways—the acquiring company’s leadership can make this problem better or worse, based on how they respond to this challenge. One of our team members was involved in a merger as a seller where the acquiring CEO was asked, “What’s going to happen when you and the other leader disagree?” The response was swift, “That’s easy. I always win.” This kind of response is an early sign that merging cultures is going to be a real slog.

Challenge 2: Lack of Agency

If a merger is challenging for a selling CEO, at least they entered into the arrangement willingly. For most employees, the deal-making process happened without their knowledge or involvement, much less their permission. To suddenly be told they are working for another company can be a bit jarring. They are used to deciding with whom they will work, and after a merger, it can feel like their agency was taken away. Some will quit just so they can feel a sense of control over their own career, even if it's not a smart career move.

People want to feel good about where they work, to know that they matter, and to be a part of something they can believe in. A successful acquiring company rises to the challenge of integrating new employees, even if it costs them (and it will cost them). If an employee feels insecure in the company and unclear about their new role, they will bide time before looking for an exit.

Challenge 3: Remote, In Person, or Hybrid?

Once most workers were forced to work remotely, many have tasted freedom and flexibility and don’t want to give it up. Throw in a load of laundry at lunch? Yes, please! 

Others have been mourning the loss of in-person, high-contact teamwork and are bringing it back. Increased productivity, higher trust levels, and better communication are big benefits of collocation, not to mention the spontaneous interactions between meetings and a robust sense of community.

So, what happens when you merge two companies that have different cultures related to remote work? If the parent company values in-person culture, they will establish policies toward that end. It’s not uncommon to see these companies require 2–4 days per week in the office. But if the company they are acquiring has been built on remote work, then this can make or break the employment relationship. 

A friend of mine going through a pending merger told me, “We are 100% remote workforce, and the parent company wants everyone in the office three days a week at least. If they require in-person work, then many of my co-workers will leave and the dealmakers won’t have much of a merger after all.”

These are just a few of the ways that cultures can clash during a high-stakes merger. In part two of this article, we will look at the remaining four top challenges that businesses face when merging two cultures.

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Need some help thinking through M&A as a growth strategy? Or perhaps your company needs someone to review your integration plan and see how it can be stronger. Or maybe you need your own Alice, someone with outside perspective and the skills to keep everyone together. RKE Partners can be your partner for a successful integration strategy. Schedule a consultation to learn how.