6 Overlooked Aspects of M&a Deals that Cause Post-Closing Problems
Mergers and acquisitions are complex processes with many hidden pitfalls that can derail even the most promising deals. This article delves into often overlooked aspects of M&A transactions that frequently lead to post-closing problems, drawing on insights from industry experts. From cultural integration challenges to AI model conflicts, understanding these critical factors can make the difference between a successful merger and a costly misstep.
- Partnership Reality Check Prevents Post-Merger Collapse
- Cultural Integration Key to M&A Success
- Early HR Due Diligence Mitigates Employment Risks
- Unified Automation Governance Streamlines M&A Integration
- AI Model Conflicts Demand Pre-Merger Audits
- ERP System Alignment Crucial for Smooth Transition
Partnership Reality Check Prevents Post-Merger Collapse
The most overlooked aspect? The partnership reality check.
Everyone obsesses over valuations and earn-outs, but I see deals collapse six months later because nobody discussed the difficult issues. For instance, who actually has the authority to dismiss the problematic hygienist? What happens when the buyer wants to change software systems and the seller believes it's a poor decision?
I handled a deal last year where the seller expected to continue managing day-to-day operations, while the buyer thought they were acquiring full control immediately. Both parties were convinced the other understood the arrangement. No one lied—they simply never had the uncomfortable conversation about what an "advisory role" entails when you're still treating patients four days a week.
The marriage analogy is often used, but it's more akin to moving in with roommates who previously owned the entire house. Someone has to decide what temperature to maintain, and if you can't agree on that, you're likely to encounter more significant problems.
We've implemented a practice that may sound overly sentimental, but it's effective: we require buyers and sellers to spend quality time together outside the conference room. Whether it's golf, dinner, or another activity, you learn a great deal about someone when they're not performing for their attorney.
Observe how people behave during negotiations. The buyer who haggles over every repair request? They'll likely micromanage your hygiene schedule. The seller who suddenly "remembers" another liability three days before closing? Good luck obtaining straightforward answers about patient retention rates.
Most M&A advisors treat this process like selling equipment. It's not. These individuals have to work together.
Cultural Integration Key to M&A Success
The statistics vary, but research indicates that cultural differences account for 50% or more of disappointing M&A deals.
In a study conducted by Pritchett, LP (found at https://www.mergerintegration.com/merger-cultural-integration-survey), only 5% of the 133 executives of acquirers surveyed say they conduct a "culture gap analysis" or compatibility study using a structured survey form to determine cultural fit. Moreover, only 2% of organizations contract with an outside firm to conduct such an analysis.
In the rare cases when acquirers do collect culture data, it often remains unused because acquirers lack a practical plan for operationalizing it. Organizations rarely have a coherent methodology for integrating cultures.
We recommend 3 steps (see video https://www.mergerintegration.com/culture-integration-in-m-a) for effective culture integration:
1. Conduct carefully aimed culture due diligence
2. Design a plan that is practical and viable
3. Sustain executive commitment throughout implementation of the plan
Weakness in any of these three steps puts the integration at serious risk.
Acquirers should scrutinize cultural aspects of the deal with the same discipline given to financial and legal issues. Culture is far too important to be handled poorly during M&A... but it usually is.
Early HR Due Diligence Mitigates Employment Risks
One commonly overlooked aspect of M&A deals is the post-closing integration of employee obligations, especially in cross-border transactions. While legal teams often focus on share transfer mechanics and financial warranties, employment law mismatches—such as unacknowledged severance rights, accrued leave, or unregistered benefits—can trigger disputes or unexpected liabilities after closing.
In my practice, I proactively mitigate this risk by initiating early HR due diligence in parallel with financial and legal audits. We also implement binding covenants in the SPA requiring the seller to provide up-to-date employment records, confirm social security compliance, and disclose any ongoing disputes. In cross-border matters, I flag differences in labor law regimes for both sides to align expectations well before closing.
This approach helps reduce surprises and builds trust between parties, especially in Turkish M&A transactions involving foreign buyers unfamiliar with our labor code.
Unified Automation Governance Streamlines M&A Integration
One aspect that trips teams up post-M&A is overlapping automation workflows that don't share the same data governance rules. I've seen two payment systems merged without aligning approval chains, which ended up slowing down treasury operations rather than scaling them. The lesson was that creating a unified governance playbook early avoids endless patchwork fixes later. Proactively, I advise mapping out both systems' automation dependencies and agreeing on a single governance model before integration starts.
AI Model Conflicts Demand Pre-Merger Audits
One common blind spot I've seen in M&A deals is when companies underestimate conflicts between their AI automation models. On paper, each system looks impressive, but once merged, mismatched data structures cause bottlenecks that frustrate both teams and clients. The big takeaway from past integrations was that you can't skip an early joint audit of both architectures and governance frameworks. By setting a unified framework before closing, continuity flows naturally, and clients barely notice the transition.
ERP System Alignment Crucial for Smooth Transition
One overlooked challenge in M&A deals is the misalignment of ERP systems, especially when legacy setups need to mesh with an existing NetSuite implementation. We once supported a SaaS company that acquired a competitor using a homegrown billing platform, and the reporting chaos was immediate. We measured before and after integration, and monthly close times improved from weeks to just a few days. The key is to run technical due diligence early and push for an integration roadmap before the ink is dry. Without that, the deal's value is often hidden behind data silos and messy workflows.
