The solution does not judge culture, but helps make visible the assumptions underlying valuation and value creation.

What Culture Due Diligence Matrix is not

• It is not an assessment of individual employees

• It is not a value judgment on organizational forms

• It is not a tool designed to standardize cultures

The entrepreneurial spirit that almost disappeared in compliance

A larger corporate group was considering the acquisition of an owner-managed company characterized by strong entrepreneurial spirit and high agility.

On paper, the synergies appeared attractive. However, one question became crucial:

Where is the fit — and where do we risk suffocating the entrepreneurial spirit through compliance and governance structures?

Culture Due Diligence Matrix revealed both a culture clash relating to decision-making processes, a clear culture fit in the performance culture, and a culture add in the form of highly disciplined business concepts operated with strong pride and ownership.

The analysis created a neutral platform for dialogue.

Potential tensions were addressed before closing, and the integration leads gained a clear understanding of what needed to be protected, what needed to be adjusted, and what needed to be built.

Culture Due Diligence Matrix is based on a structured online questionnaire completed anonymously by employees from both the Buyer and the Target. The questionnaire explores a number of core organizational themes which together provide insight into how decision-making, collaboration, and leadership function in practice.

Confidentiality is a fundamental requirement in M&A processes, and in the early stages of a transaction only a limited group of individuals is often involved. The analysis has therefore been designed to be carried out in two phases, while responses may be collected either simultaneously or in stages.

In Deal Mode, responses are typically collected from a smaller group of key stakeholders in order to assess the assumptions underlying the planned synergies. The Deal Mode report forms part of the Buyer’s overall decision-making basis regarding whether to submit an offer for the Target.

After closing, the analysis may be expanded into Integration Mode, where a broader group of employees participates. The Integration Mode report translates the findings into a prioritized action plan including concrete integration and leadership initiatives, supported by a transaction-specific inspiration and learning universe.

The findings are brought together in the Culture Due Diligence Matrix, highlighting four categories of insight:

• culture clash - differences that may create friction during integration and put synergies at risk
• culture fit - similarities that may support collaboration and synergy realization (unless they impede the integration effort)
• culture add - strengths within the Target that may contribute positively to the new organization
• absent culture - capabilities or practices that the merged organization needs to develop

The matrix thereby provides an integrated view of the cultural and organizational assumptions underlying both valuation and value creation.