Our latest thinking



The announcement flatly stated, “No change is anticipated.” And the Journal, on perusal, Promised, “Business as usual.” Some saw that as wishful thinking, Others soaked it up, unblinking— But no one fully realized That soon they would be MERGERIZED!

Then employees grew uncertain; Ambiguity, like a curtain, Hid the future, made things vague— Fear gripped some folks like the plague. Work was really not much fun— No one trusted anyone. That was when they first surmised They were being MERGERIZED!

Top brass stonewalled it at first, Then said, “Look, we’re past the worst.” But talk is cheap, and doesn’t sell When thing are going straight to hell. The casualties began to mount, And people watched the body count. With apprehension in their eyes They talked of being MERGERIZED!

Some bailed out and some were fired, Others took cash and retired. Those who stayed were down and out, Mad as fire or in a pout. Low morale and high confusion Led to problems in profusion. Now it couldn’t be disguised— They had just been MERGERIZED!

This routine went on for ages, Through the grief and mourning stages— Good careers went up in smoke, And shareholders were going broke. When faith and hope had run their course, The marriage ended in divorce. No one should really be surprised… That’s life, when firms get MERGERIZED!

—Price Pritchett

This poem—taken from Price Pritchett’s 1987 book Making Mergers Work: A Guide to Managing Mergers and Acquisitions—summarizes thirty years of research on M&A: it doesn’t work most of the time.  The question: why?

Pritchett’s book is a pithy guide to managing corporate integration and interestingly has a final chapter on Managing Differences in Corporate Culture.  You get the feeling that someone said, “Hey, we should have something in there on culture.” and so they added a final chapter.

I’m not critical of Pritchett.  He and the firm that bears his name are pioneers in leading corporations to focus on the very human element of making a business combination successful.  Furthermore, the book was written in 1987 and the collective thought has come a long way in almost 30 years, but it still has a long way to go.

While much research has been done in the last 30 years on culture and the importance of cultural fit in business combinations, there is still very little application of that knowledge.  The M&A process is invariably run by bankers and lawyers who have little training in or understanding of the origins of culture let alone how it should be assessed and managed in the M&A process.

At EPOCH Pi, we’ve developed tools to give insight into cultural fit so it can be incorporated into the assessment of a deal’s likelihood of success and then inform the integration process.  It’s early in this journey, and we continue to refine our processes, but cultural assessment is an essential element for any financial arrangement where organizations merge or share governance.  It’s essential, that is, if you want it to work.