Post Merger Challenges & How to Address Them

In any merger and acquisition (M&A) deal, all parties involved need to think about what the post merger integration will look like. This is especially true of international or cross-border M&As, which made up 33% of global M&As in 2023 and totaled $950B in value.

The key challenges associated with integrating international or culturally diverse organisations include navigating differences in corporate culture, communication styles, leadership approaches, operational practices, and M&A employee retention strategies.

Failure to address these critical areas in a timely and effective manner can significantly undermine the anticipated benefits of the merger or acquisition, leading to suboptimal performance, internal discord, and even the ultimate failure of the combined entity.

Below, we’ll explore these post merger integration challenges and how to resolve them.

#1: Cultural Integration

Organisations coming together after a cross-border M&A deal typically have unique corporate cultures. Internal management and customs can differ widely amongst companies in the same region. Merging across borders adds another layer of cultural differences to consider.

For example, consider the business cultures across the UK and Canada. In the UK, elements like courtesy and discipline are balanced with a distinctly British kind of ironic humour. Business in Canada is similar, but it blends in elements of US and French culture that both employees and managers from a British company might need to familiarise themselves with during their M&A integration process.

When integrating workforces from different backgrounds, onboarding, and training exercises should acknowledge and celebrate differences while establishing a cohesive corporate culture after an M&A transaction.

See related: Post M&A Integration Checklist

#2: Communication Breakdowns

When merging or acquiring across countries, language barriers are some of the biggest post merger challenges. Employees in one country may not speak the same language as their managers in another (or vice versa), which can strain collaboration and operations.

Aside from language, there are also differences in business communication across cultures:

• Tone, cadence, and structure of email and phone communications differ
• Expectations about presentations and how to focus and structure them differ
• How people value, approach, and act during meetings can vary widely
• Social and para-work expectations (i.e., after-work activities) differ
• Negotiation tactics and approaches (i.e., pace, aggressiveness) differ
• Team management dynamics and hierarchical expectations differ

To address issues like these, companies should monitor for possible gaps in communication and expectations before the merger agreement. Investing in translation and interpretation solutions will ensure clear communication among all team members and contractors.

#3: Leadership Alignment

Another critical difference across business cultures in different countries is the way effective leadership is supposed to look—what qualities are expected of leaders. These differences can amount to post merger integration challenges if they’re not approached with care.

An Oxford study of effective leadership in the UK shows how most British business people value character in their leaders over interpersonal skills and professional competence. Similarly, Spanish business culture prizes leaders’ personality traits over technical expertise. However, in Germany, technical capacity and strong, clear direction are essential for leaders and key talent.

When merging with a company from a different country, it’s important to understand what its employees’ perspectives on leadership are to avoid miscommunicating expectations.

#4: Operational Efficiency

Another common challenge that occurs after an M&A transaction is that existing teams’ redundancies and conflicts can cause operational inefficiency. Three specific issues, per Harvard Business Review (HBR), are:

• Mirror teams, or duplicated roles and responsibilities between the companies

• Double incentives, or costly additional bonuses in the service of alignment

• Co-location, or an emphasis on inefficient in-person communications

Importantly, HBR also highlights how these phenomena can be assets if approached in the right ways. The author illustrates how mirrored personnel can share experience, doubled incentives can increase productivity, and co-location can hasten integration and cross-team collaboration and reduce M&A disputes.

Smoothing out relationships between newly joined teams, especially in an international context,  is much easier and more effective with a dedicated human resources (HR) support solution.

#5: Employee Morale and Engagement

Another challenge that occurs during the integration process is the tension that can arise among employees, contractors, and other labourers associated with both companies.

On the one hand, staff and contractors may experience lower morale in the context of institutional turbulence, which can lead to poor performance. This is due in large part to uncertainty about their future prospects, and the simple fix is prioritising transparency and clear communication.

Engaging personnel post merger can also be challenging, not only because of the cultural and communication differences highlighted above. Here too, companies need to be transparent and practise effective communication in their outreach and engagement efforts after an M&A deal. Letting staff know that they are valued goes a long way toward making them want to participate in company culture. This will also massively contribute to overall integration success as well.