Culture clash or culture fit: what decides M&A success?

We’ve all been there. A new colleague joins the team – they come from a different company, bring different habits, and have a completely different way of working. What starts as a minor difference in meeting etiquette or email tone can become a source of tension.

Now imagine that dynamic scaled up across thousands of employees, two entire organisations, and a high-stakes merger. That’s the reality of cultural integration in mergers and acquisitions (M&A) – and it’s often where things go wrong.

The culture collision

When two companies merge, their cultures don’t simply blend – they collide. Employees may experience identity loss, anxiety, or resistance as familiar norms disappear. Research shows that cultural misalignment is one of the most common reasons mergers fail: although most executives say culture is critical, few give it enough attention, and studies suggest poor management of people and culture drives the majority of failed deals. Some sources mention between 50 and 75% of post-merger integrations failing to meet desired objectives due to culture collision, while others put this rate at even higher level of above 80%.[1]

Sources mention between 50 and 75% of post-merger integrations failing to meet desired objectives due to culture collision.

Friction typically arises from conflicting styles – how decisions are made, how people communicate, or what leaders expect.

One case study describes a merger where one company operated top-down, while the other encouraged open debate. When a HR manager challenged a finance director’s decision - standard practice in their culture - it was seen as insubordination. Neither side was wrong, but both were unprepared for the clash. 

This tension is often exacerbated by the way M&A business cases are constructed:

• Cost synergies (reducing costs by combining operations) – the classic “2 + 2 = 3.5” logic – are typically easier to model and usually achieved through consolidation or job reductions.
• Revenue synergies (the extra revenue the combined companies might generate together) – the elusive “2 + 2 = 4.5” – depend on the new organisation working better together than the sum of its parts. That requires cultural alignment, trust, and collaboration – all of which are harder to quantify, but critical to long-term success.

Identity, anxiety, and acculturation

Academic literature refers to this as “acculturative stress” – the psychological strain of adapting to a new cultural environment.[1] Employees may feel they’re losing their professional identity or that their values are no longer recognised. This can lead to an “us vs. them” mentality, where legacy teams resist integration and cling to old ways of working. If left unaddressed, this mindset erodes trust, slows collaboration, and undermines the merger’s strategic goals.

Culture isn’t just a “people issue” – it can directly affect company performance after a merger.  

Why does this matter for investors? Culture isn’t just a “people issue” – it can directly affect company performance after a merger. When teams struggle to work together, promised benefits from the deal are harder to deliver. Delays, lost clients, and higher staff turnover can all follow, putting pressure on revenues and margins. Over time, this increases the risk that the merger fails to deliver the returns investors were expecting.

In practice, this can linger for years. Long after the ink has dried, employees may still identify with their legacy organisation. “Are you an X company person or a Y company person?” can become a common refrain after the merger – a telling sign that the integration hasn’t fully landed. These lingering affiliations can subtly undermine cohesion and reinforce silos, especially if not acknowledged and addressed.

“Cultural misalignment is one of the most common – and most underestimated – reasons mergers fail, as people friction turns into performance risk.” A 2024 study of nearly 250 mergers found that when the cultures of two companies were very different, deals were less likely to succeed. These mergers tended to be more expensive, delivered less innovation afterwards, and performed worse over the long term.[1] Put simply, the bigger the cultural gap, the harder it was to make the merger work – and the more likely investors were to be disappointed.

Lessons from the field

Cautionary tales

Success stories

What works

So, what does good look like? Research and practice suggest a few key principles:

• Early start: Cultural due diligence should begin before the deal is signed. Leveraging surveys, interviews, and even employee review sites to understand each company’s values, norms, and non-negotiables.
• Acknowledging the differences: Don’t pretend the cultures are the same. Instead, talking openly about the differences and co-creating a shared vision that blends the best of both.
• Leading from the top: Cultural integration isn’t just HR’s job. Senior leaders must model the desired behaviours and visibly support the new culture.
• Cultural ambassadors’ empowerment: Identifying respected employees from both sides who can champion integration, bridge gaps, and provide feedback from the ground.
• Communicating relentlessly: Uncertainty breeds fear. Clear, consistent, and honest communication helps employees understand what’s changing – and why.
• Measurement and adaptation: Track cultural integration alongside financial metrics. Monitoring engagement, turnover, and collaboration to spot issues early and adjust course.

A chance to rebuild better

Mergers are disruptive, but they’re also an opportunity. They allow organisations to rethink outdated practices, strengthen inclusion, and design a culture that’s fit for the future. But that won’t happen by accident. Culture must be treated as a strategic priority – not a soft issue to be dealt with later.

As one study puts it, culture is the “missing link” in many failed integrations.8 But when handled with care, it can be the glue that holds a new organisation together - and the spark that helps it thrive. 

We are highly supportive of our investee companies which consider and implement these principles when undergoing mergers.

While not specifically targeted at M&A, we have been engaging on workplace culture since 2020. We strive to improve the long-term resilience, inclusivity, and performance of the organisations we invest in by ensuring culture remains a core part of how value is created and sustained.

[1] www.financierworldwide.com/culture-clashes-in-ma-new-perspectives 
[2] www.polarresearch.net/index.php/mgmt/article/download/4175/9924/
[3] Mind the gap: the effect of cultural distance on mergers and acquisitions (glassdoor)
[4] The DaimlerChrysler merger – a cultural mismatch?
[5] How Did the AOL-Time Warner Merger Go Wrong?
[6] Novikova, Galina, Cross-Border M&A in Innovation-Driven Industries: Strategic Lessons from the Geely-Volvo Case (July 06, 2025). Available at SSRN:  www.ssrn.com/abstract=5340906
[7] https://mnacommunity.com/insights/disney-and-pixar-merger/
[8] https://mumabusinessreview.org/2020/MBR-04-18-169-176-Cintron-CulturalIntegration.pdf

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