Culture fit

company culture
New answer on Jun 26, 2021
5 Answers
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Anonymous A asked on Jun 25, 2021

In M&A cases we typically look at culture fit of the acquisition target with the buyer's company..but does this matter if the buyer is a PE firm? Is there a culture fit with portfolio or PE firm consideration? Or is this culture aspect only relevant if a company is buying another company?

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Henning
Expert
replied on Jun 26, 2021
Bain | passed >15 MBB interviews as a candidate

Cultural fit with the PE fund is irrelevant. In PE cases (quite common at Bain as we're the market leader and essentially everybody works in PE some time during their career), you could ask whether they have or plan to acquire a company that they plan to merge the target with. In that case it becomes relevant, otherwise not. 

This is a possible, but not very common scenario. I've done ~15 PE cases in my career and in only one of them did the fund already own a similar company.

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Francesco
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replied on Jun 26, 2021
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Hi there,

Cultural fit matters in terms of two firms that have to “work together” after the merger. Usually it is not relevant in PE cases unless:

  • There is a company in the PE portfolio that is connected to the target and the two have to work together
  • The PE firm has to rely on the current management at least for some time to bring on their plans – so the current management should be aligned with the PE long term goal (ie they cannot fire the management short term due to regulation or excessive severance)

Best,

Francesco

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Ken
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replied on Jun 25, 2021
Ex-McKinsey final round interviewer | Executive Coach

A PE fund would look at culture independently from a labour productivity perspective in terms of talent, employee engagement, competitiveness but the fit is definitely much less relevant compared to a merger case. Any investor would optimise for a good culture that leads to high productivity and conseuqently higher returns but the comparitive culture fit within their portfolio is not relevant. 

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Ian
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replied on Jun 26, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

This is a great example as to why you absolutely need to tailor your frameworks! You are correct, culture fit does not apply if a PE firm is buying a single company. Now, if they're looking to buy 2 entites and merge them (because they see synergistic value), then culture fit would apply.

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Antonello
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replied on Jun 26, 2021
McKinsey | MBA professor for consulting interviews

Hi, very often Private Equity firms leverage synergies of a new acquisition across other companies in their portfolio. In this case, cultural fit can be applicable

Best,
Antonello

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Henning gave the best answer

Henning

Bain | passed >15 MBB interviews as a candidate
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