Leadership During the Deal: Why M&As Are the Ultimate Test of Vision and Culture

Contributed by David Miller, an EO APAC Platinum One Bridge chapter member, is the founder of Alchemy of Scale, where he helps entrepreneurs unlock both the method and the magic required for business growth. He previously scaled multiple companies and now coaches elite growth-seeking CEOs and their teams.

Throughout my entrepreneurial journey with multiple acquisitions under my belt, I’ve discovered something profound about mergers, acquisitions, and spin-offs: they reveal the true nature of leadership more clearly than almost any other business activity.

While most people focus exclusively on the financial aspects of M&As, which are wildly important, I’ve learned that success hinges on something far less tangible but infinitely more valuable — the alignment between strategic vision and cultural integration.

What You’re Really Buying: Beyond Revenue

When acquiring a company, you’re purchasing six distinct components: time, customers, A-players, cross-selling opportunities, operational efficiencies, and team intelligence.

Of these, time is the most valuable element — and it’s impossible to obtain any other way. You’re buying all the accumulated time it took to build that customer base, develop expertise, and refine systems.

During a leveraged buyout, I discovered something extraordinary. The company we were buying had subject matter expertise that aligned to a small service line we had recently started. They weren’t even utilizing this expertise in their model—nor was it factored into their sale price. After integration, this unplanned synergy increased our revenue by almost US$3 million and profits by approximately US$900,000.

That’s the magic of strategic M&As: Sometimes the most valuable assets aren’t visible on the balance sheet.

My Third Acquisition: When Alignment Falls Apart

Not every deal goes smoothly. In my third acquisition, I made a critical error: I was simply buying revenue for revenue’s sake. The seller committed to providing 40-80 hours of work after closing, then planned to walk away. I naively assumed he would remain available beyond that period, but once he put in the agreed hours, he was completely unwilling to assist further — even if we paid him to help with crucial client communication.

Since I had paid all cash upfront (unlike my first two acquisitions), he had no financial incentive to ensure the long-term success of the integration. That taught me something crucial about seller motivation: When someone wants to exit quickly with cash, it’s important to understand where they fall on the spectrum of their confidence in the business’s viability to operate independently and absolving themself of problematic issues within the business.

Culture: The Invisible Deal-Breaker

Between 70% and 90% of M&As fail or underperform, with cultural misalignment being a primary factor, according to Harvard Business Review. Yet cultural integration is frequently underestimated because it’s difficult to quantify and requires significant time — often one to two years of effort — even when most everything goes as planned.

When two companies merge, almost every employee wonders: “How long is my job viable? Will they appreciate my value, or am I just an expense to eliminate?” Without clear answers, your best talent may likely begin to look elsewhere.

The real cost of getting culture wrong is losing valuable employees and the customer relationships and processes they’ve cultivated. If employees don’t align with where you’re going, there’s an end game to that relationship — they’ll either quit or you’ll fire them.

During one of my most successful acquisitions, I implemented a quick survey process for all incoming customers about what they liked, disliked, and wanted to add. After collecting responses, I communicated back: “This is what we heard, this is what we’re keeping, and these are the changes we’re making.” It created a sense of community and showed we were listening to the collective voice.

The Human Element: Finding Diamonds in the Rough

Sometimes the greatest value comes from unexpected places. During my eighth acquisition, we discovered a customer who worked at Lockheed Martin for 33 years in the F-22 fighter pilot program. That gentleman was ready to take his business elsewhere, but when he learned about the new leadership and our vision, he not only stayed a customer, but applied for a job with us!

He started as an entry-level employee and worked his way up to become my most trusted employee and chief of staff. This exemplifies what happens when you align strategy, culture, and service lines properly.

The Personal Identity Shift

Perhaps the most challenging aspect of M&As for founders is the identity transition. There’s an emotional component to owning a small business that isn’t rational — it’s somewhat maniacal.

You’ve built something from scratch that affects people’s lives and provides for families.

The deep love entrepreneurs have for their businesses makes separation particularly challenging. When you take a business away from a founder—whether they’re a grown man or woman—it’s like taking their baby. It’s difficult to separate from something that is a part of you and has been nurtured from nothing.

Leadership Lessons for the Deal

Organizations that manage culture effectively during M&As are more than 40% more likely to achieve successful integration, according to McKinsey & Company. As you navigate M&As, here are the key principles I’ve found essential:

1. Verify alignment beyond financial terms. Structure payment terms that incentivize the outcomes for both the buyer and seller. 
2. Evaluate cultural compatibility before signing. Beyond the due diligence checklist, trust your gut about whether you can truly work with the people.
3. Communicate transparently during transitions. Employees and customers need clear, consistent messaging that passes the “smell test” through sustained actions.
4. Measure what matters. Implement customer and employee Net Promoter Scores to track how the acquisition is performing beyond financial metrics.
5. Look for unrecognized value. The most profitable acquisitions often come from identifying underutilized expertise that isn’t reflected in the purchase price.

Remember that merging two cultures takes significant time and intention. The most successful acquirers recognize that while spreadsheets might drive the decision, it’s the human element that ultimately determines how much your investment multiplies or evaporates.

Want more insights from David Miller? Read his post on EO’s Inc. channel, The $10 Million Mistake That Taught Me the Value of Trust-Centered Leadership.