Blog: External Chaos Kills M&A Integrations – Manage Your Business Entropy

“In growth driven by acquisitions and integrations, a single-minded focus on unification and the big picture can destroy the very value of what is being purchased,” writes Timo Järvinen, Co-Founder of NayaDaya Analytics Inc., the Finnish creator of the game-changing People Impact Analytics®.

The real value of any company lies in its ability to keep business entropy low — to continuously transform external energy from the market into internal order, vitality, and competitive strength.

In physics, entropy is the measure of disorder. In business, entropy is the erosion of internal order, trust, cooperation, and productivity. Low business entropy means your company is winning customers, attracting investors, retaining talent, and turning them into top-performing teams, unique products, and efficient operations.

In our deeper perspective, business entropy is not just a metaphor for disorder — it is fundamental to a company’s very existence. A company survives and thrives only by importing resources and energy from the outside and using them to maintain internal order and stability, much like biological homeostasis. Without active management, entropy naturally grows, undermining the company’s ability to operate as a distinct, competitive entity in the market.

If you are growing through M&A, this is what you are paying for: the target’s ability to keep its business entropy low relative to the outside world. In integration, that ability is often under the greatest pressure.

The Hidden Challenge

From the moment the deal closes, the target company’s people face a paradox: The new owner becomes both part of their internal reality and a force from the outside.

This blurs a crucial boundary. Inside a company, people know how to act, decide, and cooperate. But when it’s unclear what’s “us” and what’s “them,” trust erodes, psychological safety drops, cooperation turns cautious, and cynicism grows. Business entropy rises.

How Buyers Unknowingly Raise Business Entropy

Many buyers believe harmonization brings efficiency, but they unintentionally flood the target with external chaos — new processes, systems, and culture — faster than its people, operations, and culture can adapt. From the target’s perspective, these changes look like external entropy pouring in, damaging the very order the buyer has just paid for. Talent leaves, productivity drops, and at worst, the company dies inside the group.

Sometimes, rapid change is exactly what both sides want — for example, when specific assets or capabilities are being extracted, or when the target itself is seeking major transformation. But whether change is slow or fast, the universal risk is the same: if external chaos overwhelms the target’s ability to maintain internal order, value is destroyed.

The First Rule of Integration: Protect the Low Business Entropy You Bought

The first task of any M&A integration is to keep internal business entropy in the target from growing faster than it can be absorbed — to protect order, trust, and cooperation long enough for change to be sustainable.

That means:

• Deciding with eyes open on the pace, sequence, and scale of changes — based on a clear understanding of what sustains low entropy in the target.

• Comparing trade-offs: Which is the bigger financial risk — delayed synergies or a failed acquisition caused by high entropy pressure?

• Preserving what works instead of breaking it for uniformity’s sake.

• Assessing before harmonizing — determining whether a change will genuinely strengthen the target’s ability to maintain its internal order, or weaken it.

• Avoiding integration arrogance — resisting the mindset that the bigger company automatically knows best.

• Keeping promises — the worst mistake is to say “nothing will change” and then disrupt people’s work; broken trust accelerates entropy.

• Asking first how you can help the target succeed, not only how to make it resemble the buyer.

  
  

Solving the Integration Paradox

Group-level harmonization can lower business entropy in the long term, but in the short term it often creates massive external entropy pressure on the target.

The solution is not to always slow down or always move fast — it’s to act deliberately:

• Reduce the initial harmonization shock.

• Strengthen the target’s internal order before imposing large-scale changes.

• Tailor integration to the context, the agreed strategy, and the target’s unique sources of vitality.

  
  

Discover how People Impact Analytics® helps you understand and control Business Entropy in M&A integrations — protecting the value you’ve invested in.

Book your online meeting here.

Timo Järvinen, Co-Founder, NayaDaya Analytics Inc.

Tel. +358 40 505 7745, timo.jarvinen@nayadaya.com 

NayaDaya Analytics Inc. is the innovator behind People Impact Analytics®, a game-changing solution for addressing people-related risks and engagement drivers in M&A integrations and transformations. Data-driven, actionable insights empower both operational and strategic decision-making. Powered by science- and AI-based emotion and behavior intelligence, the patent-pending method and technology offer a unique approach to promote successful change and foster inclusive, sustainable growth. Discover more at https://www.nayadaya.com