M&A DUE DILIGENCE: DON’T FORGET THE BATHROOMS—NO JOKE

During the initial site visit for a management presentation in an M&A transaction, you’ll often hear about the company’s commitment to its employees and the pride workers take in their roles, their company, and most importantly, its customers. But as you listen to these well-rehearsed pitches, it’s crucial to observe the less curated parts of the business: the bathrooms, locker rooms, and break areas assigned to the blue-collar workforce.

These facilities can reveal more about the company’s true culture than any senior management presentation. If the blue-collar spaces are clean, well-maintained, and functional, it suggests the company genuinely values all its employees—not just those in the white collar office suite.  On the other hand, if the blue collar facilities are filthy, neglected, worn out, or in serious disrepair, it’s often a sign that the company’s stated commitment to its employees is more lip service than reality.

When blue-collar staff are expected to use dirty and worn out facilities for their personal use at work, while their white-collar co-workers bask in an air conditioned, clean and updated office suite, this sends a message – – and it’s not a good one.  If these workers are not treated with a reasonable level of dignity and respect, then this will likely result in their lack of pride in the workplace and, ultimately, their work itself. Pride in their roles is linked to pride in the company and care for its customers. If the company fails to provide an environment that fosters such pride, it can affect not only morale but also performance. In contrast, well-kept facilities signal that management recognizes the importance of a clean and maintained personal space areas as part of a functional work environment. Workers who are treated with that level of dignity and respect are more likely to reciprocate and treat it, the company, its customers and their jobs, with dignity, respect and care. And those who don’t? They’re probably not the kind of employees the company wants to retain.

In short, setting your eyes on the blue collar bathroom, locker room and break room is likely to provide meaningful insight that should not be ignored in diligence.

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