An acquisition can make sense financially and strategically while still damaging the business that completes it. What happens when a company acquiring a business has incompatible ways of working, making decisions, and treating people? One likely outcome is that the expected growth is replaced by disruption and lost productivity.

Real estate entrepreneur and investor Lon Welch built Colorado’s largest independent real estate brokerage, growing it to more than 750 agents and $2.8 billion in annual sales. The growth was aided by strategic acquisitions that brought new markets, capabilities, and people into the business. One deal became so damaging that Lon paid the sellers to take the business back. This experience showed Lon the importance of understanding the culture of the business he was acquiring.

What I didn’t appreciate is that the culture of that company was just completely oil and water different from ours.

Culture is often assessed during an acquisition through interviews with senior leaders, employee surveys, and documents describing the company’s values. Those sources may reveal what the organization says about itself, but they do not reliably show how people respond to a prospective owner, how decisions are made in practice, or whether the two groups can work together.

The experience caused Lon to change his approach. Once the owners had established that a potential deal made strategic sense, he asked to teach several classes inside the target company’s offices. That gave him an opportunity to meet its agents, observe the organization, and allow its people to get to know him before either side committed to the acquisition.

The interaction was useful in exposing cultural compatibility and reduced uncertainty if the acquisition proceeded. Employees were no longer hearing that an unknown buyer was taking control as they had already spent time with the person who would be leading the combined organization.

If there’s any way for you to get access to figure out the culture in advance, that’d be a good idea.

Leaders considering an acquisition should create a similar opportunity for meaningful contact before the agreement is completed. The activity will differ by business, but it should involve real work or a substantive exchange rather than another presentation between executives. A joint workshop, operating review, customer exercise, or short collaborative project can reveal how people communicate, respond to disagreement, and approach decisions.

The objective is not to prove that both companies have identical cultures. The objective is to discover whether the differences can coexist without undermining the value the acquisition is expected to create

Melissa’s Take

Lon didn’t try to force it. He unwound the deal.

Most leaders don’t. They buy a business, find out the cultures are incompatible, and spend years trying to make it work anyway. Unwinding feels like admitting failure, so they keep pushing instead.

I’ve watched poor cultural fit spread beyond the people directly involved. Once the wrong behaviors enter an organization, they distract good people from doing good work. The acquisition was supposed to add customers, capabilities, or scale. Instead the company spends its management attention just holding itself together.

It’s like having dinner with someone before you hire them, or dating before you decide to marry. The event isn’t the point. The event is what lets everyone involved understand what they’re actually committing to.

My gateway action: add one question to the next acquisition discussion. What can we do with this company before the deal closes that would show us how its people actually work?

This is part of a fuller conversation with Lon Welch about building a differentiated business, evaluating investment performance across market cycles, diversifying real estate risk, maintaining strong business fundamentals during difficult markets, and choosing a competitive environment in which the company’s strengths will be valued.

The Full Executive Brief goes deeper into every conversation on the podcast, with the context and the follow-up you won’t get from the audio alone. Subscribers also get access to the Maverick Test, a short diagnostic built to show you where your own leadership has gaps you haven’t named yet.