The Importance Of Culture In M&A

Mergers and acquisitions in the healthcare industry have yielded more frequent headlines than in years past. In the wake of the Affordable Care Act, this activity shows the market adjusting to a major change, and with such a change, we see growing pains. A merger that fails can have severe consequences on the company. As such, actions need to be taken before, during, and after M&A activity to ensure the success of the final product. Among the biggest risks is poor integration of the two companies’ teams. Separate teams often have different corporate visions, different leadership structures, and varying priorities.

Starting Early

Cultural integration should be explored as transaction negotiations begin. If anticipating a deal, dedicate a team to researching and understanding the differences between the two sets of employees. If the gap between the two groups is too large, then there is a significant chance they may not be able to work together. Once the distinctions are clear, develop action plans that will allow for cultural integration between the two firms. In some instances, cluing your employees in early can help create an expectation of change. When possible, be sure to assuage concerns on both sides about continued employment. Working to bridge the cultural divide early will save your now-larger company from headaches in the future.

Cluing your employees in early can help create an expectation of change.

Active Integration

Executives need to create a single corporate vision that includes the ideals from both companies. It is important to educate the staff in both companies on the roles of their counterparts, allowing them to understand each other in advance. Training activities should permit participants to come up with their own ideas on how to work with their new employees. Retreats and other active integration measures can allow each side to get to know each other on a friendly basis first, resulting in easier professional integration. Perhaps most importantly, executives can get staff support if staff are included in the decision-making process.

Educate the staff in both companies on the roles of their counterparts.

Evaluation After The Merger

Once the merger is finalized and the two groups become one, it is important to use metrics to evaluate the success of cultural integration. Some metrics to include are: productivity and happiness of staff, correspondence between each side, and profitability. Measuring the activities and perceptions, before and after the merger, of your team will allow you to know if the efforts made before and during the merger worked. If the results are less than encouraging, identify the problems and make the right changes. If results are positive, one can assume the communication is strong between the groups. In the end, the bottom line has paramount importance. After the dust has settled, measure your profitability and determine how it compares to pre-deal data. If there are significant discrepancies, then the merger still needs to move beyond its growing pains. An integrated culture will show the problem lies beyond workplace cohesiveness.

If the results are less than encouraging, identify the problems and make the right changes.

Conclusion

The healthcare industry is changing rapidly, resulting in all sort of uncontrollable issues. Properly managing cultural integration can help you mitigate risk, leaving you time to tackle other challenges.