When I first started studying business acquisitions, I was obsessed with strategy. I thought if I nailed the financial model, built the perfect marketing plan, and structured the deal creatively, success was inevitable. Over time, I’ve learned that strategy matters, but culture matters more.
A bad culture will kill the best strategy. A strong culture will rescue even an imperfect one. When I buy a business today, I spend as much time evaluating its culture as I do its financials. I’ve learned that if the culture is toxic, the business will bleed talent, customers, and momentum, no matter how brilliant the strategy looks on paper.
In this article, I’ll explain why I put culture above strategy, the signs I look for when evaluating culture, and the mistakes I’ve made when I ignored it.
Why Culture Beats Strategy
Culture is how people actually behave when no one is watching. It shapes employee morale, customer experience, and decision-making.
A strong culture creates:
- Retention: Employees stay longer when they feel respected.
- Consistency: Customers receive the same level of service every time.
- Trust: Teams work together toward shared goals instead of pulling in different directions.
- Resilience: Businesses with strong cultures adapt to change without falling apart.
A brilliant strategy can’t succeed if employees are disengaged, customers feel neglected, or leaders undermine each other.
My First Hard Lesson
In one of my early acquisitions, I bought a company with strong financials and a promising growth plan. On paper, everything looked perfect. But I ignored the warning signs of weak culture, high turnover, complaints about management, and low morale.
Within six months, three of the top employees left. Customers noticed service slipping. Revenue dipped. I realized the strategy I had so carefully crafted was irrelevant because the culture couldn’t support it.
That deal taught me to put culture first.
How I Evaluate Culture
When I look at a business today, I study its culture through several lenses:
1. Employee Tenure and Turnover
If employees stay for years, that’s a good sign. If turnover is high, culture is likely weak.
2. How People Talk About Leadership
During diligence, I pay attention to how employees describe the owner and managers. Respectful? Distrustful? Resentful? The tone reveals the truth.
3. Customer Experience
A business with a strong culture usually has strong customer loyalty. Poor culture often shows up as inconsistent service or complaints.
4. Transparency
I ask how information flows. In strong cultures, leaders share openly. In weak cultures, information is hoarded.
5. Conflict Management
Every company has conflict. The question is whether it’s handled constructively or avoided until it festers.
Why Culture Affects Valuation
Buyers like me discount valuation when culture is weak. A toxic workplace increases risk and decreases transferability. Conversely, companies with strong, positive cultures are worth more because they retain people and customers even through transitions.
Mistakes I’ve Made
I’ve made the mistake of underestimating how fragile culture can be after an ownership change. Even if culture was strong under the seller, employees may feel anxious when leadership shifts. If I don’t manage that carefully, culture can deteriorate quickly.
I’ve also made the mistake of thinking I could “fix” a bad culture with policies. In reality, culture changes slowly through consistent behavior, not quick fixes.
How I Protect Culture in Acquisitions
When I buy a company, I protect the culture by:
- Communicating clearly: I tell employees what’s staying the same and what will change.
- Respecting traditions: I don’t erase company rituals just to make my mark.
- Empowering leaders: I support managers rather than micromanaging them.
- Listening first: I spend time understanding culture before making big changes.
Why Culture Sustains Strategy
The best part about prioritizing culture is that it sustains strategy. When employees are engaged and aligned, even modest strategies succeed. When culture is weak, even the best strategy fails.
That’s why, in my view, culture isn’t just “important”, it’s the foundation on which everything else rests.
Final Thoughts
I’ve learned through experience that culture is more important than strategy in acquisitions. Strategy gives direction, but culture provides execution. Without culture, plans collapse. With culture, even imperfect plans thrive.
That’s why I evaluate culture carefully in every deal and treat protecting it as a top priority after closing.
I continue sharing my lessons on acquisitions, private equity, and real estate strategy at DrConnorRobertson.com, where I document the playbook I’ve built deal by deal.