How to Assess the Culture of Acquisition Targets

In lower middle market M&A, it’s easy to get caught up in the financials—EBITDA margins, revenue trends, customer churn, or synergies on paper. But what’s often overlooked (and can make or break post-close success) is culture.

Whether you’re a strategic acquirer seeking integration or a private equity firm planning to install new leadership, cultural misalignment is one of the most underestimated risks in any transaction. At William & Wall, we believe culture isn’t soft—it’s structural. And it’s measurable.

Here’s how to assess it with rigor before you close the deal.

1. Define What Culture Means in Your Context

Before assessing a target, get clear on what you mean by culture. For some acquirers, it's about leadership style. For others, it's organizational structure, decision-making velocity, or internal communication norms.

Start by articulating your own:

• What values define your organization?

• How does your company approach risk, innovation, or hierarchy?

• What behaviors are rewarded? What’s non-negotiable?

Knowing your own “cultural baseline” helps you identify areas of fit or friction more quickly in a target.

2. Use Management Interviews as Behavioral Data Points

Culture is best revealed, not declared. In management presentations and diligence calls, listen closely for how leaders describe:

• Their team’s approach to problem-solving

• Attitudes toward accountability and autonomy

• How decisions are made and communicated

• Whether the org favors stability or speed

Is there an “us vs. them” tone when describing senior leadership vs. frontline? Is employee turnover referenced defensively or transparently? These are signals—not just anecdotes.

📌 Tip: Ask how the team responded to its most recent major change or challenge (e.g., COVID, loss of a major customer). Culture often shows up under pressure.

3. Analyze Org Charts and Incentive Systems

Org charts and compensation structures are culture on paper. A flat org with shared incentives may indicate a collaborative environment. A rigid, multi-tiered structure with siloed bonuses may point to hierarchy and internal competition.

During diligence, review:

• Span of control (How many direct reports per manager?)

• Incentive alignment (Do key managers have equity or phantom stock?)

• Succession plans (Is the next layer of leadership ready?)

• Turnover and tenure data (Especially in revenue-driving roles)

Patterns here offer a window into retention, morale, and how empowered teams feel.

4. Survey the Workforce (Tactfully)

If you're far enough along in a deal—or considering a post-close culture plan—anonymous employee surveys can provide unfiltered insights.

Key areas to probe:

• Trust in leadership

• Communication transparency

• Role clarity

• Career development pathways

• Pride in the organization

While you may not always get access pre-close, some acquirers engage third parties post-LOI to run blind culture diagnostics. Even selective pulse surveys can surface risk areas that aren’t visible on a spreadsheet.

5. Pay Close Attention to the Founder’s Style

In founder-led businesses, company culture is often a direct extension of the founder’s personality. Their leadership approach, decision preferences, and conflict resolution style shape the organizational DNA.

Ask yourself:

• Is the founder’s presence deeply embedded in operations?

• Are employees empowered to act independently of ownership?

• How is institutional knowledge transferred—or is it all tribal?

If the founder is exiting, a thoughtful culture transition plan is critical. If they’re staying on, alignment of expectations is even more important.

6. Consider Post-Close Integration Goals

Culture assessment should be tied to what you're trying to achieve post-close. Are you:

• Fully integrating the team into your operations?

• Keeping the target as a standalone portfolio company?

• Replacing leadership or retaining them?

Each scenario demands a different level of cultural alignment—and a different diligence lens.

📍 For example, a strategic acquirer folding the target into their broader platform must focus on process compatibility and leadership cohesion. A PE firm keeping the team intact may place more emphasis on leadership durability and cultural independence.

Conclusion: Culture Is Due Diligence, Not a Footnote

In M&A, culture is not an intangible—it’s a predictor of integration success, talent retention, and long-term value creation. Yet too often, it’s either ignored or approached too late in the process.

At William & Wall, we help our clients assess cultural fit with the same rigor applied to financial performance. Because no matter how attractive the metrics, a misaligned team can erode value faster than any spreadsheet can predict.

📍William & Wall is a boutique investment bank based in Scottsdale, Arizona. We advise business owners and acquirers on strategic sales, private equity transactions, and buy-side diligence—with a focus on founder-led businesses across the Southwest and nationwide.

Considering an acquisition?
We’ll help you evaluate the full picture—culture included.