With the economic downturn of the past three years, opportunities for mergers and acquisitions as growth strategies—or exit strategies—have increased. This trend impacts family businesses on both ends of the deal: as buyers and sellers of business “synergies”—the advantages of combining businesses (usually financial). While the family firm’s cultural distinctiveness is an asset that does not typically appear on the books, preserving these valuable and central aspects of a family firm should be considered in the midst of these transactions. Having some consideration for the synergies between cultures is important to ensure success for the businesses, the founding families and the communities in which they have lived and worked.

Traditional acquisition or merger practices have been built around consolidating key resources, financial and physical assets, brand names and tradable endowments. The more forward-thinking of these strategies also pay attention to capturing key pieces of the more elusive core competencies, which include an organization’s best practices, skills, knowledge bases and routines. But the most critical components of these transactions involving family businesses are the Root Strategic Assets, which actually serve as the foundation of family business and are most likely keys to future success. Root Strategic Assets include family culture and history, commitment to the local community and continued leadership/influence. 

Mergers and acquisitions immediately impact organizations with changes in ownership, ideology and, eventually, in practice. While each of the three Family Business Root Strategic Assets are unlikely to be included in a company’s valuation process, how a buying company moves to acknowledge—or a selling company moves to preserve—family culture and history will influence the eventual success of the overall deal and whether other perceived synergies will be attained or knowledgeable talent retained. 

So, how do we understand the possible cultural synergies? Anthropologists have long known that the task of learning about a specific group’s culture—or the unique way they interact with each other—starts by asking individual members about what they value, their key relationships and their history. 

The reason it is important to pay attention to the unique family business culture of a firm in the context of a merger or acquisition is because culture is about identifying bedrock components of the business that are the functional equivalent of the core structures of a building—the foundation, beams, pilings, etc. Careful inspection, identification and assessment of the supporting walls of a building are crucial to the ultimate integrity of the space before it can be effectively and safely utilized—or renovated. While a company might be acquired because of the synergies around brands, competencies or physical assets, the deal will likely collapse if the primary cultural underpinnings that support and maintain those valuable resources aren’t identified and steps taken to retain them. This is particularly true within family-owned businesses. 

But identifying and describing an organization’s culture alone is inadequate to the task of maintaining key structural supports. Even if cultural traits are accurately identified, the process of maintaining their integrity within a new organizational structure presents an entirely new set of challenges that most managers are ill-equipped to pull off. That’s because cultural traits by themselves don’t provide enough information about where specific structural supports are located in a company. Cultural traits tend to be simple, outward manifestations of the more complex underpinnings that hold a family business together, help define what it does and, more importantly, how the family’s values and history constantly inform it. 

The practice of identifying family business cultural traits as a Root Strategic Asset in mergers and acquisitions is about identifying the underlying values, disciplines, conditions and beliefs that make up the internal weight-bearing structures of an organization that have provided success for the business, the family and the community. It is worth doing as they are also keys to the future success of the firm.