Culture is king: Exploring winning approaches for companies on 'buy and build' journeys

Every highly successful business is fuelled by its culture, so getting cultural integration right is pivotal for companies on 'buy and build' journeys. If the approach and processes are on point, talent will flourish and the entire company will rapidly emerge strengthened through acquisition.

Successfully integrating the cultures of merging companies is no easy feat, and missing the mark can see M&A journeys collapse. A recent survey from Bain & Company found that nearly half of respondents cited cultural fit or difficulty integrating management teams as a primary reason why past deals had failed. Companies looking to grow through acquisition need to have an actionable, systematic approach to deliver successful integration long-term. But refining an approach can be tricky, especially when attempting to merge multiple entities, often across geographies and within short time frames.

Here at Livingbridge we regularly support our portfolio companies with M&A strategies, including successfully navigating integration. As mid-market M&A deal activity continues to grow, we thought it would be helpful to share insights from our team and top portfolio company executives with extensive first-hand experience.

Jensten Group is one of the UK’s largest independent insurance broking groups with more than £500m of Gross Written Premium (GWP) under management. Livingbridge invested in 2018 to support the growth of the business via acquisitions, new locations and services offered, and the company has since grown from 6 to 38 offices around the country. Here Jensten's Group People Director, Lauren Barwell, joins Associate Director on our investment team, Tess Andrews, who works closely with the Jensten team to share key pieces of advice on everything from deftly managing transitions to key pitfalls to avoid along the way.

1.Put the work into really understanding your own company culture – and then assess deals and plan integration on the basis of this

Lauren, who previously held senior roles at Octopus Investments and RSA, heads up Jensten's HR team and leads on the Group's People Strategy, including its people-centric acquisition & integration approach. She says it is vital to put the work into understanding your company’s culture at a granular level before making a single acquisition.Codifying the non-negotiables of your culture enables you to assess bolt ons for alignment on these elements, as well as understand the potential for an acquisition to beneficially add to the Group culture by introducing new and complementary cultural aspects.

Jensten has found completing an Employee Value Proposition (EVP) project helpful in this process. The project saw senior leaders and managers across the group complete expert-led workshops aimed at building understanding of what employees love about Jensten, which elements of their jobs are most important at a personal level, and areas of potential improvement. This approach not only ensures employees feel heard, but delivers real strategic benefit through honing a picture of company culture in terms of how people behave and how this translates into performance.

“It has been a really strong thread throughout our strategy over the last two years,” Lauren says. “It’s been fundamental as we've been able to say ‘we really know ourselves’, and that informs our strategy and what we're looking to buy.

“Many organisations are driven commercially and culture doesn't even enter as one of the variables, but we've walked away from deals where we feel like the culture's not right vs Jensten’s non-negotiables in the leadership or the wider organisation.”

2. Board composition matters: ensure your Board reflects the breadth of value drivers, including a focus on cultural integration and optimising M&A strategy

Tess supports our portfolio companies to define and deliver ambitious growth strategies, partnering with management teams for the entire duration of our investment. She views people and culture as a crucial underpin to value creation in a Buy and Build scenario.

“We often seek to work out which cultural elements, behaviours and values will support the value creation agenda,” she says. “When making acquisitions there’s an opportunity to be more purposeful about culture, and to link it really closely with what you're trying to achieve in your strategy. For example, collaboration is a big driver of value creation at Jensten as it enables businesses in the Group to build better central data and insights, in turn enabling the Group to create better products and then distribute them back out to customers through their retail network. This manifests as a set of measurable behaviours which form the culture, and can be embedded by introducing processes to support their adoption.”

Tess also suggests ensuring that any company on a Buy and Build mission has adequate strategic people and culture capability at Board level. Livingbridge connected Jensten with Leadership Advisory & Performance Coach, Georgina Cavaliere, who now serves as a non-exec on the group’s Board and advised Lauren on the EVP and other people-related strategies.

“Having this type of expertise on board helps to deliver a premium business,” Tess says. “A strategic approach to people and culture is a key enabler to delivering a Group of acquisitions that is more than the sum of its parts. A carefully constructed structure and approach that underpins the whole Group ensures that you end up with far more than a collection of acquisitions.”

3. Implement an Organisation Design-led approach to avoid easy integration mistakes

“Organisation Design (OD) is a powerful lever that can help unlock value. A company's OD should clearly reflect the customer at its core and in its design enable delivery of a compelling customer proposition. Once in place, the OD can then form an underpinning structure that can support delivery of a unified culture.” Tess says.

Jensten developed an OD-first approach after finding integration failure points were linked to processes, structures and hierarchy.

Lauren says: “We've now got this really crystal clear structure in terms of the organisation design, so companies being bolted on can understand straightaway where their role fits in, what their career pathways might look like, and how opportunities for employees are enhanced now that their company is part of a wider group. We drill down to the simplicity of ‘who will report to who’?

“It's about making things really, really simple for people. Now we have a kick off call, we talk about maturity, what needs companies have, and communicate effectively about timeframes and processes from the start.”

The approach has already delivered results.

“Before we had the more purposeful approach to OD in acquisitions we saw the pace of integration was slower, and the pace of being able to draw on the value of collaboration was delayed because the purposeful strategy of how to integrate people and help them see their place in the business wasn’t there.

“Now, with a company we’ve just acquired, we’ve been clear about expectations of the leader, how the company fits into our regional model, how they're going to add value to the Group, and how everyone can prosper and grow within our organisation. Being clearer and more purposeful on these elements has meant that we’ve seen accelerated integration of that organisation, and we are seeing growth within just a few months of them being with us.”

4. Put a “human face” on the acquisition from day one – and follow through with 1:1s at every level within three months

Lauren says that putting a “human face” on the acquiring company from day one, and then ensuring that personal touch runs through to the 1:1 level post-acquisition, makes a big difference.

“Myself and other senior colleagues go to every site so that people can see our faces early on,” Lauren says. “Then we have an integration approach that means that between month one and month three after acquisition, someone in HR will have a face-to-face with every new employee to discuss their integration into Jensten and how it will go. This has been a really successful way for us to get down to all levels.”

The HR expert says that “it’s about letting people understand what they're going to get from the deal, and conveying the value of being part of a bigger group”.

“We explain how people can look forward to a better career in a wider organisation and outline how we really focus on investment in training and development. It opens up so much upside, and gives us a better talent map and access to talent across the whole group,” she says.

5. Successful buy and build strategies have integration discipline at their core: Focus on integrating data, processes, people and culture

Integration frequently falters due to tiny everyday frustrations, so it’s important for a business to ensure rigorous discipline across every element of integration including data, technology and processes. Similarly, a systematic approach also applies to cultural integration which requires ongoing thought, planning and communication to succeed as opposed to just a few ‘big bang’ actions.

Jensten has established a dedicated M&A integration team to ensure that the architecture around systems transition works smoothly, including giving new employees appropriate training at the right time.

Lauren explains: “It’s not the touchy feely part of culture, but if you make people's lives more painful by changing processes and taking away systems they rely on, then it feels like a cultural issue. It’s about making coming to work at Jensten feel great and not like it puts more obstacles in place to completing day-to-day tasks.”

6. Shifting dynamics: Use hybrid working as a way to communicate more widely

Lauren and her team at Jensten have found that the recent post-Covid shift to hybrid working can also be helpful when it comes to integrating businesses with varied office cultures.

“It has been useful because it puts everyone on a more level playing field, and opens up the possibility to connect much more widely,” Lauren says. “Pre-Covid there was less appetite for Team calls and Zoom, and this lessened our reach as people leads.”

Jensten has found that hybrid working also allows companies spread across geographies to develop a shared culture faster through joint calls and Town Halls.

7. Not a side note: Fostering crucial long-term culture through ESG initiatives

Employees are increasingly focused on their employer’s ESG credentials, and Lauren has found that delivering impactful initiatives, such as the Group’s Jensten Giving programme and Walk for Mind team event, has a really positive impact on cultural integration.

“Our EVP work showed that people want to feel like they're contributing to something bigger than Jensten, and we’re all really proud of our strategy on charity and community engagement,” Lauren says. “We've got engagement champion representatives across businesses and sites, and as soon as companies join we quickly ask for a nomination. It's about creating opportunities for employees at all levels to feel like they’re connected to something bigger.”