How a company can preserve its culture after M&A?
There are many examples in the business world where the culture of one company absorbs or suppresses another as a result of a merger.
The reasons for this are most often the unpreparedness of the company for risks, corporate bureaucracy and lengthy and cumbersome decision-making cycles. Culture is a subtle management tool and can only be influenced from within and over time. Based on the example of three deals, let us consider how companies manage to maintain their culture after a takeover.
1. Non-Interventionist Policy.
Buying a stake does not always mean actively intervening in operations. The key question is who will remain at the controls in the event of a deal. The example of Microsoft's takeover of the social network LinkedIn is illustrative in this regard. The companies did not combine teams. The management decided to leave LinkedIn's office at its old location, and Microsoft interferes in the daily operations of the acquired company to a minimum.
2. Competent Integration.
It is very important to understand that to succeed, both sides have to learn and change. Take Meta’s purchase of the social network Instagram as an example. Mark Zuckerberg promised that by allowing Instagram to retain its brand and top management, the company would develop independently of the largest social network on the planet. Most considered the deal a success until later, when the founders of Instagram announced their departure from the company due to disagreements with the head of Meta.
One way to retain the key team of an acquired company, the company (often startups) should be kept into a separate structure, a corporate sandbox, which can maintain the freer (startup) environment required for developing new products.
3. Refusal of Transformations.
An interesting example in the history of global M&A is the deal between The Walt Disney Company and Pixar. In 2006, the conglomerate The Walt Disney Company bought out Pixar after lengthy negotiations. Through the deal, The Walt Disney Company hoped to overcome the creative and production crisis with the help of the young studio. Pixar's animation technology was clearly ahead of Disney. Many were convinced that the conglomerate would destroy the basic corporate principle of Pixar – unlimited communication “without positions” – and with it the unique individual style of the young studio.
After the resounding success of the joint feature-length animated film Toy Story, the head of Disney realized that he had created a great competitor with his own hands. The relationship between the companies soured. The next head of the company, Bob Iger, was able to turn a competitor into an ally, promising Jobs, the major shareholder of Pixar, that after the takeover he would preserve the spirit and values of his company.
The deal had favorable consequences for both participating companies due to the fact that the buyer refused to be transformed. The startup retained key employees who were the bearers of an agile culture and retained the freedom to operate. (Source: Forbes)