The seven components and the questions or issues they are 5. Non-negotiables: This term is unique to M&A and answers designed to address are: what areas must change to become part of the buyer. It is closely tied with the organizational design and operating 1. Business drivers and basic facts: This answers the model, but other examples are financial reporting, business fundamental questions of what you are buying, why you are budgeting, budgeting approvals, health and safety buying it and where the value is. standards, compliance standards and training, and travel 2. Leadership and talent: This answers the question of who and expense rules. the key people are in the target. 6. Inclusion and diversity (sometimes also referred to as 3. Leadership compensation and performance: This shows diversity and inclusion): This answers what the current what is truly valued in the target and who is valued when status is and what potential changes may be needed compensation totals are compared. in integration. This is an issue of growing importance 4. Organizational design and operating model: This shows especially to large Western firms, but it is not often a what needs to change, mostly in how the target needs priority for smaller firms and not an issue at all in some to be organized and operate to be part of the larger firm. non-Western countries. This component comes up as the most common and most 7. Post-close working relationship: This answers how predictable one that requires change at the target. Also, employees at all levels from the two organizations work these predictable changes often cost a lot of time and together after close. This is what is learned, over time and effort and cause frustration for target employees as they is the most intangible of all the components. It is generally try to adapt to the bigger firm’s way of operating. thought of as the “softest” element of culture compared with those elements above. Leaders are not excluded from these issues; they face them first. How advanced acquirers approach culture in M&A 11