{"id":51933,"date":"2017-05-18t05:00:54","date_gmt":"2017-05-18t09:00:54","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=51933"},"modified":"2017-06-21t22:50:18","modified_gmt":"2017-06-22t02:50:18","slug":"importance-ma-culture-due-diligence","status":"publish","type":"post","link":"\/\/www.g005e.com\/2017\/05\/18\/importance-ma-culture-due-diligence\/","title":{"rendered":"the importance of m&a culture due diligence"},"content":{"rendered":"
<\/a>a 6-point blueprint.<\/strong><\/p>\n by domenick j. esposito<\/i><\/p>\n over the last several years, there have been over 200 merger, acquisition, alliance and joint venture announcements by the top 100 and other fast-growing cpa firms. every indication is that these combinations will continue at a very rapid rate as cpa firms are:<\/p>\n more on strategic planning: <\/b>get your money\u2019s worth from non-billable time<\/a> | stay independent but keep looking upward<\/a> | ineffective partners and how to address them<\/a> cpa firm ceos and other senior management are very effective at financial and operational due diligence, tracking results and holding partners accountable for hitting timely targets. on its face, an observer would tend to conclude that these 200+ combinations are very accretive to partner profitability after an integration period of 18 to 24 months. unfortunately, with many combinations, this is not often the case.<\/p><\/blockquote>\n when we speak to ceos and other senior management at the top 100 and other fast-growing firms, it\u2019s apparent that many, if not most, of these combinations fall significantly short of growth and profit expectations. some even wind up in divorce with costly breakup costs.<\/p>\n so, why is that?<\/p>\n well, all too often, it comes down to culture incompatibilities between the acquirer and the acquiree that reduce the probability of a successful combination. yes, when all is said and done, irreconcilable culture clash is often cited as the #1 reason why combinations fall short and fail to deliver the anticipated benefits. and when a combination starts to \u201cleak oil,\u201d the costs are painfully apparent as morale drops, new business originations aren\u2019t very impressive, client billings soften, synergies fail to materialize and key partners and potential partners leave for other opportunities.<\/p>\n \u201cculture isn\u2019t just one aspect of the game. it is the game.\u201d \u2013 lou gerstner, former ibm chairman and ceo<\/p><\/blockquote>\n we have found that when it comes to determining culture compatibilities, many firms talk a good game by citing a number of similarities as proof of compatibility. cheap culture talk, however, masks potential red flags and fails to help firms navigate through thorny culture issues.<\/p>\n before we take a deep dive into culture compatibilities between an acquirer and an acquiree and what can be done to deal with potential clashes, let\u2019s define culture. to sum it up, each firm has a somewhat unique culture that essentially is the accumulation of shared values, beliefs and behaviors that determine how partners and staff carry out day-to-day tasks such as managing and governing the practice, serving clients and attracting and retaining talent.<\/p>\n we refer to a firm\u2019s culture as its dna \u2013 it is woven into a firm\u2019s very existence. a firm\u2019s culture has three key prongs:<\/p>\n an assessment of culture compatibilities should not be a glossover or an afterthought when considering a possible combination. to minimize \u2013 or perhaps avoid \u2013 a shortfall in growth and profits, culture deserves a lot more upfront weight in the due diligence process. firms should follow a cultural assessment blueprint similar to the one summarized below:<\/p>\n when you look in the mirror and are honest with yourself, how do you rate your firm\u2019s effectiveness at addressing cultural issues when evaluating a possible combination? if your answer is that you haven\u2019t given cultural compatibilities a serious evaluation up until now, you are probably leaving money on the table and might be even risking a nasty divorce.<\/p>\n if you want to improve outcomes and the probability that your next combination is a win-win for your partners, clients and staff, we encourage you to perform a cultural assessment right up front.<\/p>\n if you conclude that the acquirer and the acquiree have cultural differences, make an assessment whether things can be improved or not. if you conclude that there are irreconcilable cultural differences, we recommend that you cut off further conversations and negotiations. better to call off the marriage than divorcing or worst yet, living together in disillusionment and frustration.<\/p>\n buyer beware.<\/p>\n why did john dillinger rob banks? it was because that\u2019s where the money is. similarly, why should an acquirer make culture due diligence a priority when evaluating potential combinations? it\u2019s because that\u2019s where most deals fall apart and where the money is lost.<\/p>\n","protected":false},"excerpt":{"rendered":" a 6-point blueprint.<\/strong>\n
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\nby domenick j. esposito<\/em><\/p>\n","protected":false},"author":1596,"featured_media":49054,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","footnotes":""},"categories":[3120,9],"tags":[680,297],"class_list":["post-51933","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pro-member-exclusive","category-strategy","tag-ma","tag-merger"],"acf":[],"yoast_head":"\n