{"id":11160,"date":"2020-02-24T11:06:53","date_gmt":"2020-02-24T16:06:53","guid":{"rendered":"https:\/\/gtm.com\/business\/?p=11160"},"modified":"2023-04-18T13:55:51","modified_gmt":"2023-04-18T17:55:51","slug":"leading-the-deal-with-culture","status":"publish","type":"post","link":"https:\/\/gtm.com\/business\/leading-the-deal-with-culture\/","title":{"rendered":"Leading The Deal With Culture"},"content":{"rendered":"<p>Many business owners work tirelessly to build their companies\u00a0with some type of\u00a0end\u00a0goal in mind.\u00a0 They build their business with several\u00a0plausible\u00a0endings.\u00a0 They\u00a0can\u00a0build\u00a0the business\u00a0until:<\/p>\n<ul role=\"list\">\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"1\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"1\">it\u2019s not fun anymore\u00a0or\u00a0they\u2019re\u00a0gone- shut the doors<\/li>\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"2\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"1\">they can leave a legacy &#8211; planned succession<\/li>\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"3\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"1\">sell it to a similar bigger fish<\/li>\n<\/ul>\n<ul role=\"list\">\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"1\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"1\">sell it to private equity investors to flip<\/li>\n<\/ul>\n<p>It\u2019s a choice. Some\u00a0choices reflect\u00a0personal beliefs, some are planned goals,\u00a0and\u00a0others are a result of\u00a0forces beyond their control.\u00a0 There has been a trend over the last two decades of\u00a0business owners\u00a0becoming increasingly\u00a0attracted to the last option- selling to a private equity investor.\u00a0From a human resources perspective, we have seen this option with the potential to be the most damaging.<\/p>\n<p>In some of the worst cases, private equity investors are\u00a0reported\u00a0by former employees as\u00a0bloodsuckers\u00a0who feed off\u00a0of the blood, sweat and tears\u00a0of its people, culture\u00a0and corporate values.\u00a0 They are described as pirates that arrive, pillage and leave with only a small circle of executives enjoying immense wealth with little regard to the lives impacted by their greed.\u00a0 Some tell stories of how\u00a0certain\u00a0private equity firms\u00a0plunder every industry\u00a0they touch.\u00a0\u00a0These private equity firms don\u2019t care about the long- term viability of the company.\u00a0The people who receive the riches\u00a0boast openly and\u00a0they\u00a0advocate how this is\u00a0the\u00a0way it should be done.\u00a0Yet many experts report how private equity infusions have devastating effects and has widened the disparity between the haves and have-nots.<\/p>\n<p>The first thing to go\u00a0wrong\u00a0is\u00a0the\u00a0destruction of a\u00a0company\u2019s trusted and beloved\u00a0culture.\u00a0 Culture can often be an afterthought for private equity deal-making, yet\u00a0it can be\u00a0the first thing that makes the deal unravel.\u00a0A good example is Daimler Benz\u2019s failed acquisition of Chrysler.\u00a0\u00a0Everyone underestimated the cultural differences and\u00a0no one knew\u00a0how to overcome them.<\/p>\n<p>Many times, there is no effort to\u00a0focus on the people-side of the\u00a0deal\u00a0because\u00a0it\u00a0is an underdeveloped skill amongst the players.\u00a0People and culture can be seen as overly complex and difficult to control.\u00a0 Investors can read a balance sheet, calculate EBITA and project sales, but they find it too difficult to put a number on culture and they have little experience in how culture\u00a0is\u00a0influenced.<\/p>\n<p>There tends to be no\u00a0plans\u00a0to integrate teams and the only focus on retention is limited to executives.\u00a0\u00a0What is often missed is that the true value within the business lies with the people just below the top tier.\u00a0 If they leave, revenues potentially leave with them.<\/p>\n<p>In a survey performed by Price Waterhouse, it reported most companies would have\u00a0included\u00a0cultural\u00a0aspects of the deal if they were to do it again.<\/p>\n<ul role=\"list\">\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"1\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"2\">57% said that cultural issues hampered deal value\u00a0realization. The resulting loss of talent can quickly throw plans off course.<\/li>\n<\/ul>\n<ul role=\"list\">\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"1\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"2\">83% of the deals that lost significant value saw between 21-30% of key talent leave the business.<\/li>\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"2\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"2\">A breakdown of morale in the business can also deter new talent from joining.<\/li>\n<\/ul>\n<p>It\u2019s clear that culture should be a key focus on the agenda,\u00a0yet we find it\u00a0very\u00a0hard to convince a private equity firm to include this in due diligence.\u00a0 As\u00a0HR\u00a0consultants who have been brought into merger and acquisition deals, there can be many\u00a0preemptive, during and after steps that assist in cultural awareness and more positive outcomes.\u00a0\u00a0HR consultants\u00a0can:<\/p>\n<ul role=\"list\">\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"3\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"3\">Analyze the workflows needed in the newly formed organization and\u00a0identify\u00a0team members with\u00a0the knowledge, skills and abilities to accomplish new\u00a0measures.<\/li>\n<\/ul>\n<ul role=\"list\">\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"1\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"3\">Planted\u00a0consultants\u00a0in both companies to\u00a0influence the\u00a0companies\u2019\u00a0people and culture\u00a0towards\u00a0the same\u00a0initiatives.<\/li>\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"2\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"3\">Identify\u00a0the keepers and\u00a0the\u00a0reductions.<\/li>\n<li role=\"listitem\" aria-setsize=\"-1\" data-aria-level=\"1\" data-aria-posinset=\"3\" data-font=\"Symbol\" data-leveltext=\"\uf0b7\" data-listid=\"3\">Afterward, they can communicate the benefits and build support. They\u00a0can develop a plan\u00a0for change\u00a0and implement steps to build a winning culture in the newly\u00a0formed\u00a0business.<\/li>\n<\/ul>\n<p>It\u00a0is\u00a0a choice to cut and run or pay it forward.\u00a0 If the goal\u00a0is to build the future, leading with culture can avoid many mistakes.\u00a0 Investors can\u00a0turn culture from a missed factor to a driver of\u00a0deal value.\u00a0The deal can be an example\u00a0of greed and destruction or\u00a0it can\u00a0be\u00a0a\u00a0story about\u00a0how\u00a0a\u00a0great\u00a0company\u00a0took the\u00a0next\u00a0step to even more\u00a0success.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many business owners work tirelessly to build their companies\u00a0with some type of\u00a0end\u00a0goal in mind.\u00a0 They build their business with several\u00a0plausible\u00a0endings.\u00a0 They\u00a0can\u00a0build\u00a0the business\u00a0until: it\u2019s not fun anymore\u00a0or\u00a0they\u2019re\u00a0gone- shut the doors they can leave a legacy &#8211; planned succession sell it to a similar bigger fish sell it to private equity investors to flip It\u2019s a choice. [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":10844,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[266],"tags":[],"post_folder":[268],"class_list":["post-11160","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-consulting-services"],"_links":{"self":[{"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/posts\/11160","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/comments?post=11160"}],"version-history":[{"count":1,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/posts\/11160\/revisions"}],"predecessor-version":[{"id":11161,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/posts\/11160\/revisions\/11161"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/media\/10844"}],"wp:attachment":[{"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/media?parent=11160"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/categories?post=11160"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/tags?post=11160"},{"taxonomy":"post_folder","embeddable":true,"href":"https:\/\/gtm.com\/business\/wp-json\/wp\/v2\/post_folder?post=11160"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}