Cultural due diligence: what you can learn before close
Adapted from PMI Mastery: Ensuring Deal Value
Branka Dessens and Thomas Kessler
Acquirers rightly focus on financials, legal risk, operational synergies and market position. It is a mistake to overlook culture. Ignoring cultural alignment often results in failed integrations, talent loss, operational inefficiency and, ultimately, less value from the acquisition.
Even when a deal makes perfect sense on paper, entrenched cultural differences lead to disengagement, leadership clashes, miscommunication and delay. A highly hierarchical company may struggle to integrate with a flat, fast-moving one. Differences in decision-making, attitude to risk or internal communication stall progress. And key talent may leave if they feel alienated in the new environment.
By identifying cultural gaps early, acquirers can either prepare a robust integration strategy or reconsider the deal entirely.
The constraint: access
Access to the target is limited before close. Confidentiality and competitive sensitivity restrict direct engagement with employees, detailed surveys or full exposure to processes. Careful, deliberate research still offers valuable insight.
The majority of acquisitions that I see look at the fit simply from a commercial and financial angle, and the problems that pop up later could have easily been figured out earlier in the acquisition process. I don't think it's too late to fix cultural misalignments when a deal is in diligence. I have a checklist that asks employees on all levels 10-15 questions on how they perceive the company, and start that as discussion point. People on different levels often have a vastly different perception on the organization.
How a culture assessment works
- Identify the attributes that determine culture in these two organisations: decision-making, risk, communication, how work gets done.
- Select participants across levels and functions, and run a short culture assessment survey or interviews.
- Analyse the results: how different employee groups perceive each organisation, the cultural strengths to build on, the attributes driving the differences.
- Recommend interventions and cultural initiatives that support the integration.
Corporate culture, also within the same country, can vary widely. What has worked well is to do interviews or surveys on corporate culture. These results can then in turn raise awareness of existing differences between the two organizations. One might be more autocratic and top down in decision making, the other one more consensus oriented. Having this out in the open helps to navigate through the differences and use the integration work as a catalyst to form a new corporate culture.
Integration work sharpens the deal
Integration work during diligence sharpens deal strategy by grounding it in execution realities. When we assess integration complexity, synergy achievability, and cultural compatibility early, we avoid over-optimism and surface hidden friction points. Done right, it turns integration from a post-deal headache into a strategic lever during negotiations.