{"id":22083,"date":"2021-11-17T16:28:06","date_gmt":"2021-11-17T16:28:06","guid":{"rendered":"https:\/\/davies-group.com\/consulting\/blog\/davies-wealth-management-mini-series-part-two-what-is-culture-and-why-does-it-matter-2\/"},"modified":"2026-01-23T13:28:58","modified_gmt":"2026-01-23T13:28:58","slug":"davies-wealth-management-mini-series-part-two-what-is-culture-and-why-does-it-matter-2","status":"publish","type":"blog","link":"https:\/\/davies-group.com\/consulting\/blog\/davies-wealth-management-mini-series-part-two-what-is-culture-and-why-does-it-matter-2\/","title":{"rendered":"Davies Wealth Management M&A Mini-Series: Part Two – What is culture and why does it matter?"},"content":{"rendered":"

Our first article<\/a> in this four part series explored the two major deal types being used in the market today:\u00a0<\/span><\/p>\n

    \n
  1. A share deal where the entire\u00a0company is taken over<\/span>\u00a0<\/span><\/li>\n
  2. An asset deal where on certain accounts and employees are\u00a0<\/span><\/li>\n<\/ol>\n

    Now let’s look at the importance of culture in making an acquisition successful and the different ways it should be approached depending on the deal type.<\/span>\u00a0<\/span><\/p>\n

    The importance of culture<\/strong>\u00a0<\/span><\/p>\n

    Culture is what defines what we value and how we work together.\u00a0 In both asset deals and share deals, one must always remember that we all want to know what is considered desired behaviour and what is not.\u00a0 It is not reasonable to believe that, just because of a transaction, all what was important yesterday is no longer valid today.\u00a0 How will be judged going forward?\u00a0 These are the questions that need to be positively answered\u00a0in order for\u00a0these transactions to be successful.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

    Whether it’s a share deal or an asset deal, one is acquiring a new set of employees who worked in a certain way for a long time.\u00a0 Any purchase is very disruptive, and the new owner must exercise great care in making sure that the work continues to go on as usual.\u00a0<\/span><\/p>\n

    This will be a period of great unease and the owner must be sure to allocate much time to communication and \u2013 more importantly \u2013 listening to the concerns of the newly acquired staff.\u00a0<\/span><\/p>\n

    Sadly, it most often the case, that the new owners spend\u00a0the majority of\u00a0their communication telling the new staff all about the firm that has acquired them and not much time listening to their new employees explain how they worked successfully up until this purchase.\u00a0<\/span><\/p>\n

    As is usually the case, we have two ears and one\u00a0mouth,\u00a0and we should use them in that ratio of\u00a02:1 in terms of\u00a0listening and speaking.\u00a0<\/span><\/p>\n

    Culture in a share deal<\/strong>\u00a0<\/span><\/p>\n

    When acquiring the entirety of a firm, the buyer must respect the newly purchased organization, its history and ultimately the culture that made them worth buying.\u00a0\u00a0What one tends to do in these cases is to rapidly integrate the organisation without spending the time to really understand what makes the newly purchased organisation tick.\u00a0 Although the owner thinks they may know the firm well after having spent weeks in data rooms and a few interviews, this is far from understanding an organisation.\u00a0 In many ways, one can say that once the deal has been concluded, only the quantitative data has been reviewed and now the work of the qualitative data begins.<\/span>\u00a0<\/span><\/p>\n

    On paper, the organisation was worth buying and now it is owned.\u00a0 As mentioned, the immediate temptation is to force the new firm into working exactly like to the buyer as quick as possible.\u00a0 Of course, there is a financial necessity the acquirer to do so but I have these this have a very adverse effect on the most valuable asset in the acquisition: the people.\u00a0\u00a0<\/span><\/p>\n

    Once the deal is announced,\u00a0the owner sets\u00a0timetables\u00a0and deadline and the new employees already feel that they are on the back foot.\u00a0 This can lead to resignations and an unease that will be difficult to rectify.\u00a0<\/span><\/p>\n

    What to do?\u00a0<\/strong>\u00a0<\/span><\/p>\n

    Treat the\u00a0first part of the new ownership as the qualitative part of your due diligence.\u00a0 What would you normally do in terms of\u00a0assessing something qualitatively?<\/span>\u00a0<\/span><\/p>\n

    What is a qualitative review?<\/strong><\/span>\u00a0<\/span><\/p>\n

    “A qualitative systematic review\u202fderives data from observation, interviews, or verbal interactions and focuses on the meanings and interpretations of the participants. It will include focus groups, interviews, observations and diaries.\u201d<\/em><\/p><\/blockquote>\n

    Now we are not saying that the new owner should spend 18 months doing a qualitative review before starting implementation; we are saying that interviews, group meetings and discussions need to be planned as of day one.\u00a0 As the new owners, you have only spoken to a handful of people up until now and only have a very limited view on the organisation.\u00a0<\/span>\u00a0<\/strong><\/span><\/p>\n

    Interviews<\/strong>\u00a0<\/span><\/p>\n

    The owner should try to have as many interviews as possible in the first few weeks.\u00a0\u00a0It is important that this follows the hierarchy managers first, supervisors second etc.\u00a0\u00a0This will show the owner\u2019s interest in the people and a propensity to being open about the future.\u00a0 The owner is doing their homework on the organisation they have just acquired.<\/span>\u00a0<\/span><\/p>\n

    Show and tell<\/strong>\u00a0<\/span><\/p>\n

    The owner should ask each department to do a show and tell about the history of their departments, what they are proud of and what can be improved.\u00a0\u00a0In many cases there is an opportunity to identify best practice and integrate it into the future combined organisation.<\/span>\u00a0<\/span><\/p>\n

    Ways of working<\/strong>\u00a0<\/span><\/p>\n

    This will be the crux of the success of the integration\u00a0will be discussing both companies\u2019 values and codes of conduct.\u00a0 People want to know what sort of behaviour is rewarded and what sorts of behaviour are sanctioned.\u00a0 People want to know what the new rules are, identify with them and how to behave going forward.\u00a0<\/span>\u00a0<\/span><\/p>\n

    This is an area where it\u00a0would\u00a0be most beneficial to discuss this in a series of group discussions.\u00a0 People with feel empowered to say what is important to them, what has bothered them in the past and what can be fixed for the future.\u00a0\u00a0\u00a0<\/span><\/p>\n

    If there are some values or code of conduct that the employees are very important, if possible, it is a great sign to incorporate them into the new organisation.\u00a0<\/span><\/p>\n

    The importance of being transparent<\/strong>\u00a0<\/span><\/p>\n

    The best integrations I have been a part of are those who were honest with\u00a0the newly acquired company.\u00a0 This meant to not eschew discussions on redundancy within the confines of the law.\u00a0 It is more important to state the facts of what the end game will be and what is expected of those working themselves out of a job and what those people can expect at the end of their\u00a0employment. This enables the new owner to control the situation instead of having\u00a0sudden key man risk departures\u00a0and having to scramble\u00a0in order to\u00a0maintain a smooth transition.<\/span>\u00a0<\/span><\/p>\n

    False hope<\/strong>\u00a0<\/span><\/p>\n

    The worst integration I worked on was one where it was decided to have every individual in both organisations reapply for their jobs.\u00a0 This led to great unease in the company buying the new company and generate false hope for many people in the company being acquired.\u00a0 Since this was protracted over several months, several people from the buying company that were being counted on for the future left whereas many people in the new company had pinned their hopes on being hired by the new firm, honestly never had a chance.\u00a0<\/span>\u00a0<\/span><\/p>\n

    It is best to be honest and transparent from the beginning.\u00a0 Keeping information from employees is both dangerous and disrespectful.<\/span>\u00a0<\/span><\/p>\n

    Culture in an asset deal<\/strong>\u00a0<\/span><\/p>\n

    Culture in an asset deal is fundamentally a different beast.\u00a0 In many ways, doing an asset deal is very much\u00a0akin to doing a large onboarding of individual employees.\u00a0 In many ways this should be treated as such.\u00a0 One cannot assume that these individuals are thrilled to have been acquired.\u00a0 One must take the time to listen to their concerns,\u00a0suggestions,\u00a0and act upon them.<\/span>\u00a0<\/span><\/p>\n

    Why is this important?<\/strong>\u00a0<\/span><\/p>\n

    Ultimately your new employees had no choice in the matter.\u00a0 One day they were happily working for\u00a0Xbank\u00a0and from one day to the next, they are working for a new organization AND they\u00a0have to\u00a0explain and\/or convince their clients that where they\u00a0(the new employee) are\u00a0now, is the best place for the client to be.\u00a0 This is a lot to digest all at once\u00a0and they do not feel in control.\u00a0\u00a0 They had adhered to a corporate culture one moment and\u00a0all of a sudden\u00a0all has changed.\u00a0 It is vital that they are heard \u2013 individually \u2013\u00a0in order for\u00a0them voice their concerns.\u00a0 If there are\u00a0culturally positive\u00a0things that can be incorporated into the buyer\u2019s culture, every effort should be made to do so.\u00a0 This empowers the new employee as well as confirming the buyer\u2019s openness and pragmaticism.<\/span>\u00a0<\/span><\/p>\n

    Behave as if you are marketing the firm to the new employee \u2013 because you are.<\/strong>\u00a0<\/span><\/p>\n

    The only reason you bought these assets is because you need them and the people who support those accounts.\u00a0 The account managers will need to be convinced of the firm that has acquired them and then be conversant enough to convince their clients.\u00a0 These are the individuals that will either make or break the transaction.<\/span>\u00a0<\/span><\/p>\n

    Onboarding<\/strong>\u00a0<\/span><\/p>\n

    In my experience, the best asset deals were run like internal onboardings, interviews were had, presentations of the firm, close support in terms of training on systems and a very early on list of meeting with colleagues, support staff and management.\u00a0 There should not be a day in the first few weeks that the new employee does not have an onboarding event in their calendar.\u00a0 This mission is to make sure that they feel individually valued and integrated from the outset.\u00a0 If all goes well, within a year it will be difficult to tell who is from the buyer and who came across with the asset deal.\u00a0 Once the newly acquired employee feels that they ultimately chose to stay at this new organisation, the onboarding can be deemed a success.<\/span>\u00a0<\/span><\/p>\n

    How it can go wrong<\/strong>\u00a0<\/span><\/p>\n

    The way if have seen this go wrong in the past is when the buying organisation treats the transaction as a purchase of employees that need to do what they are told, not employees to be convinced that they are joining a team where they will be valued.\u00a0\u00a0As mentioned previously, these are individuals that need to be sold that this is the place they should be not a place they have<\/em> to be.\u00a0 Although there may be lucrative 2\u20133-year lockup clauses for the new employees, I have seen many of them leave the minute the contracts had expired.\u00a0 Additionally, I have also seen that certain teams never integrate and remain a team within a team which breeds both politics and unnecessary friction.<\/span>\u00a0<\/span><\/p>\n

    Read the other articles in this series:<\/p>\n