Why Purpose is Crucial to a Successful M&A Effort

The failure rate for mergers and acquisitions (M&A) sits between 70 percent and 90 percent.

Many of these fail due to poor cultural integration. (A great example of this is when Amazon began to integrate with Whole Foods.) Often, there is considerable emphasis on the front end of mergers and acquisitions on the numbers. And, while bringing another business into the fold may make financial sense, focusing solely on data distracts leaders from the real human impact an M&A effort can have. To achieve true success, equal importance must be given to the difficult task of bringing together two distinct cultures. The resistance to the change, or the degree to which it is accepted and embraced is what makes or breaks the deal and is what will determine the extent to which the M&A can propel your organization forward.

How does a leadership team do this successfully, on their own, when the consultants and the lawyers have stepped away? By leading with purpose. Purpose is a compelling statement that can merge two cultures together under a common cause. Purpose defines why the organization exists and what it seeks to accomplish in the world. With purpose, it’s possible to unify management, create a new, shared story for the combined organization, and set expectations for employees in service of a successful M&A effort.

Unify leadership

In order to set off on the right footing, effective leaders must remind themselves of what they stand for as an organization and what their responsibilities are at the helm. With this clarity of intent, leaders can share consistent messages and demonstrate aligned actions in service of their purpose. 

The time spent reviewing, revising, or creating a purpose statement will bond leadership and unite them in a shared vision for how to move the organization forward. It’s essential for business leaders to accept the statements and to feel personally accountable for bringing them to life. They must walk their talk. Only with this kind of unity can leadership teams speak as a singular front and make substantial progress on transformation efforts.

With a clear purpose and a deep enthusiasm to bring it to life, leaders can galvanize employees, magnetize the right stakeholders and optimize action strategies. By simply updating what the beliefs of the business are, and committing to acting on them, leaders demonstrate what the transition to their leadership means for the organization’s future.

Create a new story

A purpose statement is an energizing place to tell new stories about the organization. This story is compelling because it puts others at the center of why your organization exists. It tells each stakeholder the kind of impact you seek to have on their life. They can see themselves benefiting from the work you do, and will feel energized to make a similar impact on others. A story from this lens shows all employees why their work is important in the world, and helps them to make deeper meaning of their daily activities.

In an M&A situation, a purpose-driven story also defines just why you made this decision in the first place. You can tell the story in a way that the new organization can understand how they fit into the big picture of your purpose. They can see that by merging with your organization, they are better able to help you meet your purpose in the world, perhaps in a new and different way. 

Storytelling is a powerful force for making the cultural integration work. Creating a new narrative is imperative to infusing your culture with shared beliefs and values. This story will give everyone a shared sense of belonging — when they know why they have been acquired, they can feel a part of the organization as a whole. And when people feel like they belong, and believe in the just cause the organization espouses, energy alights. The culture starts to gel and progress is made towards organizational goals and objectives. 

Set expectations for employees 

A purpose statement makes clear what your organization cares about and what it does not care about. When introducing this to employees of a newly acquired organization, you can set expectations of what the business cares about and how you expect each employee to behave to meet that purpose. 

With purpose as your platform, you can create behavioral intentions for your organization. When these behaviors are widely adopted, you can point employees in the direction of “how we do things around here.”  If someone isn’t living up to those expectations, it’s easier to address them with the defined behaviors they’ve agreed to work on and work with. When each person upholds the expectations set forth, you can start to see major shifts in the cohesiveness of your culture.

What’s interesting is that a kind of self-selection can occur. We’ve seen the ways in which simply sharing a purpose statement can help with reorganization efforts. Employees who don’t feel connected to the purpose may decide to leave. This creates space for you to hire the right people, people who will believe in your purpose as much as you do and who can behave in ways that align with that intention.

Purpose is a great guiding principle for the cultural integration process. It provides a strong foundation for leaders to get behind. It lets the newly acquired organization know why it’s important to the business’s overall strategy and how they will help advance the organization’s goals. And purpose makes it clear to employees, new and old, just what you stand for and where you are headed. By investing time and energy in getting this statement together, and using it as a storytelling and management tool, you can certainly navigate and successfully manage the human aspects of the M&A process.

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