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Achieving Post-Merger Success: A Stakeholder's Guide to Cultural Due Diligence, Assessment, and Integration

ISBN: 978-0-7879-7291-2
240 pages
July 2004, Pfeiffer
Achieving Post-Merger Success: A Stakeholder

Description

“The failure rate of mergers and acquisitions is unreasonable, unacceptable, and unnecessary,” say Claude S. Lineberry and J. Robert Carleton in this much-needed resource, which outlines their unique, proven, and practical process for increasing the success of mergers and acquisitions. Written for all those with a vested interest in the success of the deal—board of directors, executives, managers, employees, and shareholders—and based on years of research and real-world experience, Achieving Post-Merger Success is a down-to-earth guide that gives stakeholders the tools they need to
  • Profile and assess corporate cultures
  • Identify potential or actual culture clash barriers to a merger or acquisition
  • Determine what to do to avoid, minimize, and resolve culture clash
  • Plan for efficient and effective post-merger cultural integration of the two organizations
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Table of Contents

List of Figures, Exhibits, and Worksheets xi

Contents of the CD-ROM xiii

Acknowledgments xv

Preface xvii

Introduction 1

PART ONE Mergers, Acquisitions, and Organizational Effectiveness 5

1 Mergers, Acquisitions, and Organizational Culture 7

The M&A Report Card 8

M&A Failure Costs 9

Why Mergers and Acquisitions Really Fail 13

Organizational Culture and Culture Clash 15

A Case Study in Managing Culture—British Airways 16

The Prevailing Wisdom Is Wrong 16

Culture as the Culprit 17

Defining Organizational Culture 18

Culture and Performance—The Hard Data 19

National Versus Organizational Culture 20

2 The Organization as a System 23

System Awareness 24

The Individual as a Performance System 25

Winning the Battle While Losing the War 26

Cross-Functional Teamwork 29

Management and the System 29

Synthesis Before Analysis 30

Culture Is Not a System Component 31

3 Organizational System Alignment 35

A Systemic Approach 36

Getting the Balance Right 37

An Organizational System Model 37

Checking the Vital Signs 46

PART TWO Cultural Due Diligence and Assessment 49

4 Overview of Cultural Due Diligence 51

Cultural Due Diligence 53

The Case for Cultural Due Diligence 54

Off-the-Shelf vs. Customized Cultural Assessment 56

Characteristics of a Customized CDD Model 59

CDD Deliverables 60

Due Diligence and Legal Restrictions 60

Pre Letter of Intent/Acceptance Activities 61

Assessing Degree of Difficulty of Cultural Integration 65

Getting It Right—The Hewlett-Packard/Compaq Merger 65

5 Performing Cultural Due Diligence 69

The CDD Process 69

Cultural Assessment 76

Drafting the Cultural Alignment and Integration Plan 81

PART THREE Cultural Alignment and Integration 83

6 Aligning and Integrating the Executive Group 89

Planning Cultural Alignment and Integration 89

Aligning the Organization 91

Discussing Results and Recommendations with CEO 91

Aligning and Integrating the Executive Group 94

Issues-Based Team Building for the New Executive Team 96

7 Aligning the Management Group 99

Gaining Clarity on Organizational Direction 100

Values and Practices 101

Gaining Agreement on Values and Practices 102

Communicating the Session Results 103

Tiger Teams 104

Feedback-Based Management Planning Sessions 105

Developmental Streams 107

Individual Action Plans 109

Follow-Up Sessions 109

8 Aligning the Total Organization 111

Design and Activities for All-Staff Sessions 111

The Case for Change 113

Work-Process Re-Engineering Sessions 115

9 Cultural Integration Success Measures 117

Financial Success Measures 117

Cultural Integration Success Measures 118

10 Summary and Conclusion 121

APPENDICES 123

Appendix A: The British Airways Transformation: A Systemic Approach 125

Appendix B: Organizational Alignment Model: A Reading 133

Appendix C: Organizational System Scan Model: An Overview 143

Appendix D: Organizational Scan: Sample Probes 149

Appendix E: Sample Values and Practices 151

Appendix F: Sample Manager 360-Degree Feedback Report: For A. Manager in XYZ Corporation 155

Appendix G: Sample Manager’s Action Planning Guide 159

Appendix H: Staff Involvement Day: Sample Agenda and Materials 185

Glossary 193

References 199

Index 203

About the Authors 209

How to Use the CD-ROM 211

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Author Information

J. Robert Carleton is co-founder and senior partner of Vector Group, Inc. and a director of Vector Data Services and Vector Europe, Ltd. He has worked in both the public and private sectors and has extensive experience as both a manager and consultant.

Claude S. Lineberry is co-founder and senior partner of Vector Group, Inc. He has worked for more than thirty years on a wide range of organizational issues with a variety of clients around the world.

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Reviews

"An early focus on culture integration beginning with a solid cultural due diligence was a critical success factor in our successful integration with Compaq. This book provides helpful models and tools for getting it right”
--Anne Murray Allen, lead – culture integration, Hewlett Packard

“Time and time again, mergers fail because of the lack of the new rganization’s ability to integrate the human capital. Typically, not much more than lip service is given to combining the two organizational cultures beforehand. It never shows up in spreadsheets and rarely in integration Gantt charts. Carleton and Lineberry provide a “How To” guide for assessing culture pre-merger and maximizing on it post-merger. This is a must read for anyone considering a merger, large or small.”
--Owen Garrick, MD, co-head – mergers and acquisitions, Novartis Pharmaceuticals

"This is an important contribution to an important field.  The authors have provided lots of checklists and how-to guides that show their enormous experience in the area and provide an excellent roadmap for others who are interested in M&A's that do not wind up on the trash heap of ill-founded dreams that do not come true."
--Dr. Stephen H. Rhinesmith, author, The Manager's Guide To Globalization:; Six Keys For Success In A Changing World

"Lineberry and Carleton have laid out a rational approach to a critical aspect of business which more times than not, falls prey to irrational and impetuous behavior. Stockholders, employees and customers alike will benefit tremendously from the wise implementation of these ideas in future mergers and acquisitions."
--Geary A. Rummler, author, Improving Performance: How To Manage The White Space On The Organization Chart

"The purpose of this book is to provide managers with tools for targeting cultural problems as the primary culprit in M&A failure and to provide a general guide to cultural due diligence and integration. It certainly fulfills this purpose, one that is unique in the marketplace."
--Dr. Christopher C. Ceczy, assistant professor of finance, The Wharton School

"This book could and should become a major influence in the field of mergers and acquisitions and in the field of performance improvement. The authors have a unique ability to relate business issues to cultural issues and cultural issues to business issues."
--Dr. Dale Brethower, professor emeritus, Western Michigan University

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