In order for a merger to succeed, organizational cultures of the companies involved have to be consistent. The greater the extent to which cultures of merging companies differ, the higher the chances of succession failure. In a merger process, an agreement is adopted that specifies the approaches that could be utilized to retain customers.
With regard to merging of firms, three cultural issues have been identified (Sinkin & Putney, 2014). First, organizational issues are important in shaping the culture of an organization. These issues are quite diverse and they address aspects such as work ethic, mobility, policies and procedures, and organic versus acquired growth Second, client issues involve customer aspects that are important in the sales of products of a company. Some of the aspects in this context include the following: billing procedures, client demographics, staff advantage, and specialists versus generalists (Sinkin & Putney, 2014). Third, owner’s issues focus on the inner aspects of a firm with regard to issues such as owner’s agreement, compensation level and range, and owner’s compensation system. The results of the evaluation of these aspects determine whether a firm can successfully merge with another company (Sinkin & Putney, 2014).
It is essential for merger deals to consider the effect of cultural differences in the success of mergers. In fact, the best way to manage cultural differences is to execute a strategy of changing cultural variations between merging firms. For example, owner-level billing rates could be changed in order to eliminate cultural differences that could negatively impact a merger.
Reference
Sinkin, J., & Putney, T. (2014). Eleventh in a series: How to assess and manage the most important factor in accounting firm mergers. Web.