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How To Maintain Company Culture Through An M&A

     

Many startup founders don’t necessarily set out to establish a unique company culture, yet according to a Mercer Culture Integration Snapshot Survey, almost 75 percent of acquisitive organizations regard culture as a key component in creating deal value.

That’s because a startup’s culture is often a major factor in defining its role in the marketplace. That culture is developed largely according to the personality, background and values of its founder or founders. Since most startups start out with a small, closely knit team handpicked by their founders, certain attitudes, visions and values simply become “how we do things around here.”

The resulting company culture becomes a major contributing factor in the company’s failure or success.

During mergers and acquisitions it can be difficult to maintain a company’s culture—yet failure to do so can undermine the business’s ability to perform as expected.

The Sweet Taste of Success: A Case Study

Ben & Jerry’s Ice Cream is a household name today, but in 1978 it was just a dream thought up by two men who had first met in 7th grade gym class. Neither knew quite what to do with his life, so they identified a shared passion—ice cream—and decided to start a company together.

Ben Cohen and Jerry Greenfield had strong social convictions, leading them to buy only from local farmers and to give 7.5% of their pretax profits to charities. They developed a company culture based largely on social responsibility and left-leaning social activism.

When the company sold to Unilever in 2001 its stock price had begun to fall. Although its customers loved the unique brand, which was Fair Trade Certified and used environmentally friendly packaging with flavor names like “Imagine Whirled Peace,” its alternative management style lacked the fiscal and managerial discipline analysts and investors demanded.

So Unilever was faced with a challenge: how could it maintain the Ben & Jerry’s image, while mixing in some much needed discipline?

3 Tips for Maintaining Company Culture During Mergers and Acquisitions
Tip 1: Create a plan to keep core cultural principles—and make it part of the deal.
In Ben & Jerry’s case, The New York Times reported that Unilever agreed to something called the “social mission process.” Unilever agreed to commit 7.5% of profits to a foundation and agreed not to reduce jobs or alter the way the ice cream was made.

Tip 2: Realize some change is inevitable, but it can go both ways.
The company’s founders, both Ben and Jerry, continued with the company with board seats after the acquisition, and the deal included plans for Ben to work with Unilever on evaluating its involvement in activities like protecting the environment—integrating some of Ben & Jerry’s culture into the larger organization.

Meanwhile, Unilever brought in a new CEO, Yves Couette, to manage the brand and help institute some much needed discipline. Yet even that was done with care—Couette took the time to adapt his management style and organizational decisions to fit within the existing culture, allowing him to gain trust and build credibility with Ben & Jerry’s employees and, ultimately, allowing for the best of both to succeed.

Tip 3: Start integration early and communicate the plan effectively.
The Ben & Jerry’s deal happened in the public eye, so everyone was aware that change was coming. Blindsiding employees only leads to increased stress over how the change will impact them individually.

While some deals need to be kept quiet until some form of agreement is in place, the sooner both companies share their future trajectory and allow employees at every level to begin adapting, the better. Make sure to “sell” the deal internally as well as externally (to shareholders and customers).

While implementing these tips won’t guarantee a smooth M&A transition, they are a good first step to getting the companies in sync.

What’s unique about your company’s culture? How is it integral to your business? 

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