Culture: The Forgotten Dealbreaker in Mergers

“They promised us culture integration — turns out they meant we’d share a table.”

After 25 years in transformation and change within the automotive sector, I’ve noticed a consistent blind spot when businesses merge or go through significant transformations. The focus is almost always on the tangible elements: property, stock, data, branding, processes, systems. All important, of course. But the softer and deeper part of the merger – the culture – is too often overlooked. Sometimes it’s ignored because it feels intangible, simply “too hard to tackle”, or because people feel "it will take care of itself."

The evidence is clear:

• Research shows 60–80% of mergers fail to live up to expectations because of poor cultural integration.

• A McKinsey study found that while 95% of executives view cultural fit as critical, 25% cite a lack of cultural cohesion as the primary reason for integration failures.

• Research on 243 M&A deals based on 400,000+ employee reviews found that cultural distance between acquirer and target firms directly reduces both short-term market value and long-term synergies, such as innovation and new product launch.

And the cost of neglect is real. Poor cultural alignment erodes trust, drives disengagement, and leads to underperformance. As KPMG put it, “conflicts in cultures and norms are the biggest threats to deal value.”

On the flip side, high-performing organisations always have great cultures. A six-year study of 95 car dealerships/retailers found that improving culture directly boosted customer satisfaction within a year, and net sales within 2–4 years. Culture isn’t fluffy – it’s commercial.

So, what’s the solution?

Take the time to really understand and engage with people. Diagnose the existing culture, analyse it rigorously, and build a strategy that addresses it. Tools such as the Barrett Values Model provide leaders with a structured, evidence-based approach to identify cultural gaps and create alignment, particularly for organisations undergoing mergers. Done right, culture becomes a source of competitive advantage, not friction.

Mergers and large transformation programmes offer a rare chance to redefine purpose, values, and behaviours for a stronger, healthier organisation. But that only happens if culture is at the top of the agenda, not an afterthought.

As a practitioner of the Barrett Values Centre, I am passionate about helping organisations navigate this journey. Because when you get culture right, you don’t just avoid failure – you unlock the full business case for transformation.

thebigteam Join Consulting Ltd

References & Credits:-

KPMG (2019). Culture Shock: Anticipate the Risks When Companies Merge.

McKinsey (2019). Organisational Culture in Mergers: Addressing the Unseen Forces.

Boyce, A., Nieminen, L., Gillespie, M., Ryan, A., & Denison, D. (2015). Which Comes First, Organisational Culture Or Performance? A Longitudinal Study Of Causal Priority With Car Dealerships.

He & Wong, Journal of Management & Governance, 2024