CULTURE IS FUNDAMENTAL , BUT DIFFICULT TO GUAGE
Culture, with a small ‘c’, is ‘the way we do things round here’.
The company culture of a prospective investment is an unseen part of our due diligence.
Arguably it is one of the most important aspects when evaluating a company. Many companies try and capture the idealised version of their company culture in a document to show stakeholders.
This is helpful but may be the polar opposite to ‘the way things are done’.
There is an old adage that culture is driven from the top. In our experience it is true that the behaviour of CEOs and their management teams are likely to be mirrored and/or used as a basis for decision making and actions by their colleagues.
Over the longer term, culture plays a crucial role in attracting and retaining talent. It is also pinpointed as a key factor as to why 75% of mergers and acquisitions fail to deliver value, two cultures clash and any benefits that were envisioned evaporate, as people struggle to work together in a productive way.
There are no hard and fast rules when assessing culture, what works well in one company may be disastrous in another. But whilst a ‘negative’ culture (be it excessive competition, poor communication, or outright bullying) has not been a barrier to success for some companies, it is a barrier to lasting success. Decreased motivation and increased employee turnover are the results of a negative corporate environment and even where an organisation weathers such trials, the ride would have been considerably smoother had good company culture been considered a foundational aspect of the business. As an investor, we look to back organisations who know themselves; that includes the awareness of what will make their business path more efficient and less complicated. As such, culture counts.
RCP is a family office in London. We invest in a wide variety of sectors, across diverse stages of development. Get in touch to discuss what you’re building.