With "unaddressed cultural clashes" disrupting M&A, insurance company encourages dealmakers to switch focus from finance to people

 
William Turvill
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Steve Allan, EMEA M&A practice leader at Willis Towers Watson, said: "Unaddressed cultural clashes are the most cited reason for deal failure" (Source: Getty)

Businesses must focus more on tackling "cultural clashes" for mergers and acquisitions (M&A) success, according to insurance company Willis Towers Watson.

A survey of 750 insurance executives found 42 per cent of companies recognise the importance of cultural integration and of hiring and retaining employees to the success of a deal.

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But the research, by Willis Towers Watson M&A Risk Consulting and Mergermarket, found respondents focus on top-line growth as a measure of success.

Revenue and commercial synergies (62 per cent), return on capital (55 per cent) and financial synergies (48 per cent) were the most frequently cited features.

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Steve Allan, EMEA M&A practice leader at Willis Towers Watson, believes this is the wrong approach.

He said: “Employee engagement and customer experience have a known link to improved financial performance, so it is disappointing that employee engagement does not feature more prominently among deal-success measures.

“Unaddressed cultural clashes are the most cited reason for deal failure which, without proper measurement warning signs, may be overlooked and could ultimately lead to a deal failing to deliver on its promise.”

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A separate report, by the Cass Business School and supported by Willis Towers Watson, found that “serial acquirers” are recognising the importance of HR issues.

Allan added: “Serial acquirers have become experts at M&A, so for this group to recognise the importance of people in the outcome of deals suggests that we should all take heed.

“Keeping people issues front and centre at all stages of the deal process should support a successful integration process, and ultimately help deals keep on track to reach their financial objectives.”

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