How Culture Clash Can Lead To the Death of A Deal

When Procter & Gamble acquired Gillette in February in a $57 billion deal, many analysts said the two companies were a natural fit. Procter & Gamble was strong in women’s products, while Gillette was firmly entrenched in the men’s market. The deal’s strengths, however, extended beyond complementary product lines.

“Gillette and P&G have similar cultures and complementary core strengths in branding, innovation, scale and go-to-market capabilities, making it a terrific fit,” said P&G’s president, chairman and CEO A.G. Lafley.

Lafley’s comments were especially relevant in light of this month’s cover story. We interviewed jan/san distributors and merger-and-acquisition experts to uncover what makes mergers and acquisitions work — and what causes an estimated 50 to 80 percent of them to fail.

What we learned: Compatible corporate cultures — or a company’s “personality” — tops the list of ingredients needed for a merger’s success, especially for smaller, independent jan/san companies. If cultures don’t match up, the deck is often stacked against the success of the union.

As merger and acquisition activity increases with an improving economy, it’s a good time to look at the forces influencing the market’s successes and failures.