I. The overlooked risk in M&A
When companies merge, it’s not just operations and systems that need to align. The organization’s culture needs to align too. In 2011, the $11 billion acquisition of Autonomy by HP remains a powerful lesson in what happens when culture alignment, change management, change communication are overlooked during major transformations.
On paper, the deal promised an operational transformation: HP would expand into enterprise software, and Autonomy would gain global reach. But the integration of the two companies faltered almost immediately. HP’s structured, hierarchical culture clashed with Autonomy’s entrepreneurial mindset. Communication between leaders and employees broke down, trust eroded, and opportunities for alignment unraveled. Within a year, HP wrote down $8.8 billion, nearly the full value of the deal, citing not just financial discrepancies, but deep operational and cultural discord.
The fallout from HP’s acquisition of Autonomy serves as one of the most visible and painful reminders of what happens when culture is ignored during integration. Autonomy’s entrepreneurial spirit and fast-paced, independent way of working were central to its success. But rather than preserving and leveraging that DNA, HP’s process-heavy, hierarchical structure quickly overtook it. The cultural misalignment wasn’t just uncomfortable. It was operationally disruptive. What made Autonomy successful was lost in translation, and the promised innovation and speed were replaced by confusion, disengagement, and an exodus of talent.
The intended strategic gains of transforming HP into a solutions powerhouse never materialized. In addition to HP’s $8.8 billion write down, key leaders left, the deal was effectively abandoned, and what remained of Autonomy’s legacy was absorbed and forgotten. Culture was not just an afterthought; it became the very reason the deal unraveled. This is why pre-merger sentiment, cultural clarity, and leadership alignment aren’t soft issues. They are the infrastructure of deal success.
It’s a familiar story. Two companies merge with high hopes and a well-structured integration plan. Strategy is clear. Synergies look promising. The deal closes.
But then? Key people leave. Engagement plummets. Progress slows.
The reason isn’t the systems or the org chart. It’s the sentiment.
SENTIMENT: noun. an attitude toward something; regard; opinion or judgment prompted by feeling. It can be expressed in words, behaviors, or responses. It can be positive, negative, or neutral and often reflects perceptions, opinions, or reactions towards a specific situation, person, organization, or event.
Why bother reminding you of that definition? Because the success of most mergers and acquisitions hinges on the behaviors of their people – and how those behaviors promote cultural alignment and employee engagement. Yet these two key outcomes are often the least resourced parts of the transition. Leadership focuses on structure and operations while culture becomes an afterthought. “We expected people to figure it out.” is often what we hear when Senscient is asked to support failing integrations.
But as recent analysis from McKinsey confirms, culture isn’t just a “nice to have” especially in M&A. It’s a strategic differentiator. Without a clear plan that addresses the anticipated needs of the people, the cultural priorities, and promotes clear communication, even the best deal logic can unravel fast.
At Senscient, we’ve seen time and again that how employees feel before the merger is how they’ll feel after, only amplified. And if that feeling is confusion, distrust, or fatigue, no new logo or leadership memo is going to fix it.
To truly realize the value of a deal, company leaders must lead with clarity, empathy, and structure. This applies not just to what gets done, but also to how people experience the change.
Let’s explore what the research says, and what to do about it.
II. What the research says
If you want your merger or acquisition to succeed, you need more than a solid integration plan. You need a clear plan to engage people so they trust the process and see a future for themselves in the new integrated company. You also need a way to show people what they can expect in the future and integrated them into the culture transformation process.
McKinsey’s 2025 report on M&A culture makes it clear: cultural integration is one of the most overlooked and under-leveraged drivers of deal value. Companies that succeed in this space set explicit cultural priorities, model new behaviors from the top, and implement structured change management plans with measurable KPIs. In other words, they treat their culture as seriously as their systems and operations.
Forbes emphasized this in 2024, identifying that employee engagement deserves the same weight as strategy during acquisitions. When leaders treat the human side as an afterthought, they often lose key talent and create deeper resistance. Forbes reminds us that the way employees experience the transition has a direct impact on how effectively they contribute to it.
A 2023 peer-reviewed study published through SSRN peels back another layer. It found that employee satisfaction within acquiring companies increases the likelihood that M&A deals will be completed and completed well. Employees who are satisfied with leadership, values, and culture contribute more consistently to integration success than those who are simply well-compensated.
Across all three sources, the message is consistent: engagement, clarity, and cultural alignment are not soft metrics. They are critical indicators of M&A success.
And yet, they’re still not prioritized often enough.
III. Pre-Merger sentiment: the multiplier effect
What employees feel before the merger is not something they leave behind on Day 1. Their sentiment carries forward and often grows louder.
Pre-merger sentiment is one of the most powerful and overlooked drivers of post-merger outcomes. If employees, regardless of whether from the acquired or acquiring company,are confused, anxious, or disengaged before the deal closes, those feelings do not fade once the integration begins. They intensify.
Leaders often believe that once a new structure is in place and announcement communications go out, alignment will follow. But culture and trust do not work on command. Employees form emotional conclusions about the transition well before the formal start. They notice gaps between what is said and what is done. They sense when priorities shift without explanation. And they remember how the process felt, long after the press release. It is an employee’s sentiment that drives behavior regardless of the reality taking place.
The companies that manage this well do something specific. They listen early. They engage managers to surface what people are hearing and fearing. They offer clear, ongoing updates that do not just explain what is happening, but clearly articulate “the why”. Most importantly, they respond in a way that shows people their voice matters. At Senscient, we deploy sentiment analyses to identify what is going on before, during, and even months after the integration is completed, addressing needs at each phase of the integration.
Ignoring how people feel in the lead-up to a merger does not neutralize the risk. It increases it. Worse, it sets the stage for resistance that becomes harder to reverse later.
IV. What employees are really asking during M&A
During a merger or acquisition, most leadership teams focus on alignment at the top. But the real questions that shape culture and performance come from employees across the organization, including middle management. These are not always asked out loud, but they are felt and shared in day-to-day conversations, meetings, and even in the decisions made.
Here are the questions we hear most often from employees in the field:
“Who’s in charge?”
In the absence of clarity, assumptions fill the gap. If authority lines are unclear, employees hesitate. Uncertainty in leadership structure often leads to hesitation in day-to-day decision making.
“How do we do this now?”
When workflows change without clear, timely, and consistent communication, teams become misaligned. Even experienced employees can feel unsure about how to contribute or where to focus. Productivity suffers as people wait for answers.
“What is our culture now?”
This question is rarely asked directly, but it shows up in behavior. Employees are often very protective of their culture. When new values and norms are not clearly defined or demonstrated, people hold tight to old patterns or form conflicting ones. Culture drifts.
“What is expected of me?”
Ambiguity in roles, goals, and success measures creates stress. Employees want to know how their work fits aligns with the new direction. Without this clarity, engagement drops and the risk of burnout increases.
These questions surface from both acquiring and acquired teams. They are not unique to any one level or department. What matters is whether leaders recognize and respond to them with intention.
The longer these questions go unanswered, the more engagement declines. The sooner they are addressed with honesty and consistency, the faster employees can connect with the new future vision and embrace their place in it.
These aren’t just abstract concerns. When employees lack clarity, the fallout shows up fast: decreased productivity, workflow breakdowns, disrupted customer experiences, and revenue at risk. We’ve seen organizations lose millions simply because key questions went unanswered during a transition.
V. The role of OCM: turning friction into focus
Mergers and acquisitions create friction. That friction is natural, but it is not neutral. It either becomes a force for progress or a barrier to success, depending on how leaders handle it.
This is where Organizational Change Management (OCM) becomes essential. At Senscient, we view OCM not as a support function, but as a strategic discipline. It is how companies move through complexity while keeping people aligned, informed, and engaged.
A strong OCM plan begins early. It does not wait for Day 1 announcements or new reporting lines. OCM begins as the deal is being brokered. As that deal progresses, OCM drives integration plans by listening through sentiment tracking, manager feedback, and open dialogue with employees – even prior to the start of integration. These early signals help shape integration planning, engagement and communication, leadership engagement and behaviors, and the structure of the transition.
OCM also ensures that communication with employees is not one-directional. People need more than information. They need space to process, ask questions, and see how leadership responds. Two-way feedback builds trust and helps employees feel included in the process, not just subjected to it. And.to ensure success, this feedback must be effectively leveraged to shape future state operational and cultural alignment activities.
Leaders must be visible and consistent. It is not enough to say the right things in emails or presentations. Employees are watching what leaders do, how they respond under pressure, and whether their behavior reflects the values the organization claims to embrace.
Finally, OCM helps you avoid the common trap of issuing generic messaging. Every merger has unique dynamics. Different groups within the organization experience change differently. Tailored alignment plans and change communications are necessary to meet people where they are and bring them along with clarity and care.
When done well, OCM enhances understanding, reduces resistance and accelerates integration. It turns uncertainty into shared direction. And it builds a culture that is ready for what comes next.
VI. The cost of getting it wrong vs. the value of getting it right
Ignoring employee sentiment during a merger or acquisition may seem harmless in the moment, but the long-term cost is steep. This was acutely felt when one of Senscient’s clients found themselves stalled bringing new product features to market given a misalignment of roles and responsibilities. Additionally, clarification of the new ways of working to define and delivery on the company’s product roadmap was overlooked. The net result was millions of dollars in lost revenue as the deal flow slowed and customer complaints escalated.
When engagement and communication are inconsistent, trust fades. When leadership is misaligned, decision-making slows. When employees do not feel heard, top talent quietly leaves. These breakdowns do not occur all at once. They unfold in small, compounding ways that erode momentum and delay results.
The financial impact is significant. Increased attrition drives up rehiring costs. Productivity stalls. Delays in integration can ripple into client relationships and investor confidence. Even the strongest strategic rationale for a deal can be undermined by cultural missteps.
On the other hand, organizations that invest in employee alignment early see measurable gains. Retention is stronger. Engagement rebounds more quickly following integration. Teams collaborate more effectively across the newly formed entity. When people understand and believe in the future vision, and feel ownership in the process, they move faster and more confidently toward the desired results.
Addressing your people’s alignment needs and nurturing the culture is not a soft asset. It is the infrastructure that shapes how people think, act, and deliver under pressure. Getting it right can transform even the most complex integrations into a source of renewed energy and commitment.
VII. Moving forward: culture is the real integration plan
Every merger or acquisition comes with disruption. But the difference between disruption that derails progress and disruption that drives growth is how people experience it.
Processes matter. Strategy matters. But your people and culture are what determines who shows up with energy, focus, and commitment. And that is shaped most powerfully not by policy, but by how leaders communicate, model behavior, and respond to feedback.
Employees will remember how the transition felt. They will remember what was said and what was not. They will take their cues from what leaders prioritize, especially in moments of uncertainty.
The research is clear. Engagement before, during, and after integration is not just a retention strategy. It is a value creation strategy. It influences the speed and success of adoption, collaboration, and innovation.
If you want your merger or acquisition to deliver on its promise, start by asking a simple question: how do your people feel right now?
At Senscient, we help companies answer that question and act upon it with clarity and empathy. We build people-first change management strategies that turn transitions into opportunities for growth.
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If your organization is planning or navigating a merger, let’s talk. Senscient provides the structure, guidance, and tools to align leadership, engage teams, and drive successful integration from the inside out.
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