The art of post merger acquisition is difficult regardless of cultural differences. When the culture of the Israel start-up is factored into the equation, the challenges of post merger integration become daunting.
This post will focus on 4 factors that will impact the ability to integrate an Israel based start up after its acquisition.
1) The Israel market has a crushing demand for top talent. So it really does not matter what type of stay bonuses are put in place after acquisition, there is a good chance that top talent will be lost. And because Israel start ups have so few processes and so much “oral law”, the chances are that not only talent will be lost, but also unrecoverable knowledge .
2) Israel is a very modern society and appears very western in its cultural accoutrements.. But Israel is not Western at all: relationships are more important than process, the “old buddy” network is impregnable similar to the Chinese old friend clique, and the communication style within the inner circle is very different than the communication with the outer one. Very few non Israelis get into the Israeli inner circle within the first 3-5 years acquisition.
3) Transparency is a rare commodity Like the Chinese, Israelis believe that transparency maybe foolish, especially when it gives HQ the possibility to screw you.
4) Israelis argue all the time about everything, both with one another and with their bosses. This is very time consuming when doing anything, large or small, because one cannot give “marching orders” to the Israel based manager and assume that things will happen. Corporate directive often encountered with the fiercest resistance due to lack of discipline and rugged individualism, the same rugged individualism and lack of discipline that enabled the innovation to begin with!
My next posts will address what is to be done when acquiring an Israeli company.
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