Culture shock: Anticipate the risks when companies merge
Due diligence must include a deep look into possible areas of conflict arising from very different cultures and norms
Industrial companies have been acquiring technology businesses at a greater rate than any other industry group for the last five years. While companies are racing to getting these cross-industry deals signed, the real challenge lies ahead in integrating the business. To realize the technology deal’s promise and capture its true value, successful acquirers are throwing out their traditional playbooks and following a select few key principles to avoid smothering the target while unlocking its potential.
In this new KPMG report, From industrial to digital with M&A, we argue that while technology businesses present a potential for out-sized returns, these acquisitions present a different and more complex set of integration challenges than their more traditional within-industry counterparts. These challenges include:
- Value erosion from lack of focus during integration
- Steep customer adoption curve
- Strong commercial network headwinds
- Unmanaged culture convergence
- Heightened attrition risk and backfill scarcity
