Culture in M&A: Why Amalgamation, Not Assimilation, Is the Only Path to Value

After more than two decades and over ten integrations, I have a deep appreciation for what Peter Drucker wrote: “Culture Eats Strategy for Breakfast.” He was right.

For all the emphasis placed on synergy targets, financial diligence, and integration checklists, most M&A deals still fail to deliver on their promise. It’s rarely because of the numbers. It’s because of something far harder to model and much easier to ignore: culture.

Culture is often acknowledged in principle but rarely understood. And when the deal closes, it usually gets handed off to HR or buried under headings like “Communications” or “Change Management.” The assumption is that it will work itself out. That assumption is one of the most expensive miscalculations a company can make.

In my experience of leading post-merger integrations across industries and geographies, I’ve seen one pattern consistently: when culture is mishandled, value erodes—slowly, silently, and often irreversibly.

The prevailing mindset is assimilation: impose the acquirer’s systems, norms, and identity on the acquired company. But assimilation rarely works. The approach that does work—and should be standard practice today—is cultural amalgamation: the deliberate blending of two organizational cultures into something stronger than either on its own. This isn’t about preserving the past or resisting change. It’s about co-creating a future that retains what made each company valuable in the first place.

Culture Is a Strategic Asset

Culture isn’t just “how we do things around here.” It’s the operating system of the organization. It dictates how decisions are made, how conflict is handled, how people lead, and how customers are treated. It lives in rituals, stories, informal networks, and unspoken norms.

And it doesn’t stop at employees. In sectors like manufacturing, agriculture, life sciences, and regional B2B markets, suppliers, regulators, local communities, and strategic partners are all part of the cultural ecosystem. When culture changes, these stakeholders notice—and often recalibrate their trust accordingly.

Ignore this ecosystem or overwrite it too quickly, and you risk damaging the very relationships and reputations that justified the acquisition.

The Three Paths Companies Take with Culture

1. Assimilation: The acquirer imposes its own culture wholesale. It feels efficient and in control. But it drives quiet attrition, customer disaffection, and erosion of trust.

2. Preservation: The acquired company is left untouched. This can buy time but ultimately creates silos, misalignment, and accountability gaps.

3. Amalgamation: The best of both cultures is intentionally combined into a shared identity. It takes time and leadership but retains trust, fosters collaboration, and builds shared ownership of the future.

Only amalgamation works in the long run.

Culture Failures Are Costly, Common, and Unacknowledged

The data confirms what many of us know: 70% of M&A deals fail to deliver expected value (McKinsey). 65% of executives cite cultural issues as the cause (PwC). Companies that manage culture well retain 90% of key talent, compared to 60% when they don’t (Bain).

This isn’t just about morale. It’s about momentum, synergies, customers, and execution. Daimler-Chrysler failed because German hierarchy clashed with American informality. AOL-Time Warner collapsed because two identities never blended. Disney-Pixar succeeded because leadership chose deliberate amalgamation.

A Practical Framework for Amalgamation

1. Start Culture Diligence Early: Begin during due diligence, not after. Identify behaviors, decision styles, trust dynamics, and informal leaders. Ask: “What’s one thing this company does that we must not lose?”

2. Define Non-Negotiables: You can’t blend everything. Decide what must remain, whether customer orientation, decision speed, or collaboration. Be explicit about what will change and what won’t.

3. Design for Moments That Matter: Culture lives in how onboarding happens, how meetings are run, how recognition works. Focus here—not on posters or slogans.

4. Identify and Empower Influencers: Not just leaders. Informal influencers carry credibility and trust. Put them in the integration room.

5. Retain the Founders (At Least Temporarily): Removing them too quickly severs the cultural core. Transition roles and advisory bridges create stability.

6. Set Realistic Timelines: Culture doesn’t integrate on a Gantt chart. It takes 12–24 months of modeling, feedback, and course correction.

7. Measure What Matters: Beyond synergy targets, track attrition, engagement, customer satisfaction, and cross-team collaboration.

   
   

What Most Plans Miss Entirely

Even good integration teams forget: - Suppliers & vendors whose trust runs deep - Customers who sense tone shifts before announcements - Local communities who grant your license to operate - Strategic partners who may drift if values no longer align

These groups are the barometers of cultural health. Ignore them at your peril.

Final Thought: Culture Isn’t a Checkbox

You don’t buy a company just for its assets. You buy it for the people and the relationships that made those assets valuable. Treat culture as an afterthought, and those people leave, those relationships fade, and the value you paid for dissolves.

Cultural amalgamation isn’t soft. It’s strategic. If strategy is what you plan, culture is how things really get done. And if you get it wrong, the best spreadsheets in the world won’t save you.

Which leads naturally to the next question in this series: even if you blend cultures well, what structure do you put around them? Can a functional, regional, global, or matrix model ever capture the nuance of how people actually work—or are we still drawing charts that look good on paper but fail in practice?