W W W . W A T S O N W Y A T T . C O M14 March 2002, ShanghaiKwan Chee WeiDirector Human Capital GroupWatson Wyatt SingaporeThe Importance of Cultural Integration in Mergers and Acquisitions Agenda M & A Statistics M & A Statistics A Case Study A Case Study WW’s Approach to Cultural IntegrationWW’s Approach to Cultural IntegrationWhat is Culture?What is Culture?Q & A Q & A 2AgendaM & A Statistics M & A Statistics A Case Study A Case Study WW’s Approach to Cultural IntegrationWW’s Approach to Cultural IntegrationWhat is Culture?What is Culture?Q & A Q & A 3‘Cultural & People’ Issues Often Present the Biggest Challenges“The hard stuff is easy - it’s the soft stuff that’s so hard to change.”-Frederick SmithCEO, Federal Express4Watson Wyatt M & A Survey 1998(190 CEOs, CFO, Top Executives) 75% are clearly disappointing or outright failuresSource: Watson Wyatt Worldwide M&A Survey, November 1998 50% suffer an overall drop-off in productivity in first 4-8 months 47% of acquired company executives leave within the first year; 75% within the first three years “People problems” are cited as the top integration failure factor by a sample of 45 CFOs from Fortune 500 companies who have recently merged/acquired Only 23% of all acquisitions earn their cost of capital On average, management grade the financial performance of their alliances as a “C minus” (on a scale of A to E)5Corporate culture is identified as one of the most important integration issues Source: Watson Wyatt Worldwide M&A Survey, November 1998Activities required for “successful” integrationDownsizingRedeployment of workersRecruitment of new staffRetraining workforceAlignment of comp & ben progLabor relationsManaging r...
