There’s nothing like a “merger of equals” because clashing cultures don’t allow it

In pursuit of a merger of equals, cultural differences may be overlooked or dismissed. [Read the newsletter in your browser.](=.njtQ2d9sH8RzugeOtcqJ_6ePUhRM4p_b7AQoe6xcXS4) [Cet article est aussi disponible en français](=.Wk6AQQ02FklXVwTmmchyQhw3QkLOVQ8yN7dhcaRyCHo) [Next Wave Logo] 01 September, 2024 No such thing as a "merger of equals" because clashing cultures don’t allow it [VC firms] Image | Entrepreneur --------------------------------------------------------------- However, despite how hard companies try to make mergers equal, one company typically has the upper hand - Chris Roush. In a perfect world, mergers of equals are created for mutual trust and fairness to project a unified corporate image. Yet, the world is anything but perfect. Mergers of equals are elusive and often impeded by disparities in corporate culture. Culture is a startup's approach to decision-making, leadership, adaptability, and willingness to take risks. This can include beliefs about individual success versus teamwork. For instance, some startups prioritise individual high performers, while others favour collaboration and teamwork. Recent ([for startups](=.CE0xGTtzsc3vQQQ4SD9knvwAgqzbx0BAgtvjvWIS_H0)) and past ([for corporations](=.vXHHiJv2VcT9F-F9XkdDYLz9MfXksdAVs_Z9rNv5Ugs)) examples, like the merger of HP and Compaq, show how cultural differences can undermine the equitable distribution of benefits, including employment practices and strategic direction. There are three ways of looking at this disparity, anchored on culture. First, a dominant startup's staff may be less likely to perceive cultural clashes or be more receptive to aspects that align with their cultural values, possibly contributing to abandoning the “merger of equals” concept. Post-merger cultural practices can reveal different interpretations of equality between the merging startups. Additionally, differing cultural conventions can emerge from various aspects of the merging startups. In pursuit of a merger of equals, these differences may be overlooked or dismissed, thus stopping the aim of equality from being achieved. Next Wave continues after this ad. [Wimbart Survey] We’re excited to announce our partnership with Wimbart on the second edition of their pioneering pan-African research publication, “Startup Performance Reporting in Africa”. This report is set to launch in the first week of October and aims to shed light on the intricacies of investor relations within the African tech ecosystem. The survey is now open, and we’re calling on all African founders and investors to participate. Over the past decade, Wimbart has worked closely with a wide range of stakeholders in Africa's tech sector. Their first report identified significant challenges, notably the disconnect between investors and founders, which poses a major threat to African tech ventures This year’s edition aims to explore these issues even further, incorporating new insights from startup founders to better understand and address communication gaps that impact the African tech ecosystem. By participating in this survey, you’ll contribute valuable insights that will shape the future of investor relations and support the growth of African startups The survey is now open and will close on Friday, 6th September 2024 at 23:59 pm UK time. It takes just 6 minutes to complete and is fully confidential. Make your voice heard. [Click here to participate.](=.msS-kIjZb7dgMsmbjSJ9vI-GQh1A1i5_a28YffSp3Hw) It’s all about culture In addition to negotiating prices and other financial terms, organizations discussing mergers need to negotiate culture. Leaders should start by conducting a cultural assessment to understand how people, practices, and management reflect tightness or looseness in both companies - Harvard Business Review. Mergers of equals are hinged on the perception of fairness; if employees feel that resources are distributed equitably and decision-making processes are just, they're more likely to commit to the new organisation. In some cases, this can be interpreted as “fairness in resource allocation” and in others as “fairness of processes and procedures.” Despite equality often seen as a cornerstone of fair mergers, it's not sustainable in the long term. Cultural differences between merging startups can create challenges in maintaining equality and ensuring a successful integration. These differences influence how work is done, priorities are set, and promises are fulfilled. Partner Content: Read: Fintech company, Netapps launches reliable and secure suite of products[here](=.9KIofkd-W6If0i5J3EoIFdO1zxXBoWxFLonRzppd4zc). To understand the operationalisation of equality in mergers, it is critical that we consider cultural dynamics. Although mergers and acquisitions are frequently mentioned in the news, few discuss how equality is implemented over time. Ignoring the cultural factors that shape equality's value and practice is an oversight that is seldom discussed. For these reasons, when two startups merge, they often face challenges because their cultures—values, beliefs, and practices—differ. This "culture clash" can harm the merger's success. In mergers where both startups are supposed to be equal, conflict sometimes arises if one startup’s management makes most of the decisions. This creates feelings of inequality, leading to a lack of commitment and cooperation from the other side. It's especially important for top managers to address these culture clashes, as their commitment to the merger directly affects the motivation of their employees. If the cultures of the merging startups remain too different, each might try to hold onto its ways, leading to a clear division between them. In mergers where one culture is more potent, the weaker one might feel threatened and resist change. Over time, shared experiences can help blend the cultures or widen the gap, especially if the differences are noticeable. To keep things equal, top managers must be sensitive to both cultures and work actively to bring them together. And culture clashes aren’t just about different values or norms—they’re really about identity. When creating a new, merged culture, employees from the less dominant startup might feel like they’re being forced to give up their old identity, leading to resistance and other negative feelings. However, if people believe in equality and see it in the newly formed entity, they may be more willing to integrate. Equality can guide decisions during the merger to help everyone understand what is acceptable and how to proceed. --------------------------------------------------------------- Next Wave ends after this ad. [Moonshot Conversations 2024](=.N3qo7WphZznVyHieP7WpymIQxUjxv31etb0qp9ncGTA) Born into a modest family in Ibadan with his father owning a small block industry and his mother working as a petty trader, Adewale Yusuf faced challenges as a young child. After graduating from Loyola College in 2004, Adewale was unable to pursue higher education due to financial constraints. He initially worked as a petrol attendant before discovering his passion for computers while working at a cyber cafe for 2,500 naira. Today, Adewale is the co-founder of AltSchool Africa, a fully virtual platform offering global standard learning resources you need to build and grow the career you want. He is one of the featured speakers at Moonshot 2024, joining other innovators and industry leaders who are developing groundbreaking solutions to address Africa's most pressing challenges. [Save your seat at Moonshot! Get tickets here](=.4sPUpJJ0MbqvZSxV_2G4jftVtkojyu081KdUDMj9Y-g) --------------------------------------------------------------- Kenn Abuya Senior Reporter, TechCabal Thank you for reading this far. Feel free to email kenn[at]bigcabal.com, with your thoughts about this edition of NextWave. Or just click reply to share your thoughts and feedback. --------------------------------------------------------------- We'd love to hear from you Psst! Down here! Thanks for reading today's Next Wave. Please share. 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