Cultural Due Diligence in Mergers and Acquisitions

Abstract

Due diligence refers to a comprehensive process of investigating and evaluating business opportunities in mergers and acquisitions. While early-stage due diligence usually encompasses financial and strategic assessment, one of the most important things in due diligence is looking at organizational culture at an early stage. This chapter takes stock of the existing research and practice in the area of cultural due diligence and evaluates the strengths and limitations. Based on the review of literature, we developed a framework for cultural due diligence to address the limitations of existing approaches. The framework illustrates a process to screen the M&A targets, gain insight into the target firm’s culture, and identify integration challenges. The process starts with more unobtrusive, indirect, and informal assessments of the target firm’s culture and moves onto more obtrusive, direct, and formal assessments.

Citation

Denison, D.R. and Ko, I. (2016), "Cultural Due Diligence in Mergers and Acquisitions", Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 15), Emerald Group Publishing Limited, Leeds, pp. 53-72. https://doi.org/10.1108/S1479-361X20160000015004