The Pivotal Role of HR in M&A

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Alice Koehn Benson

Founder & CEO

Over the past year, more than 80 percent of the executive HR searches my team and I have conducted list M&A experience as highly desirable. CEOs are looking for HR professionals with experience in all stages of the M&A process – from the due diligence involved in scoping appropriate buyers or sellers and evaluating the fit of advisors, to preparing for and managing the transition, integration and retention of key employees.

How have HR expectations changed?

In the past, HR leaders were tapped primarily to estimate the costs of benefits and compensation and manage the integration of disparate compensation and benefits plans. But, as data documents the importance of human capital in deal success, senior HR executives are increasingly valued as important partners throughout the process.

A 2018 survey conducted by Deloitte of more than 1,000 senior executives involved in M&A activity revealed that aligning corporate cultures is one of two key areas of M&A concern.  It also reveals that executives:

  • Consider talent acquisition a motivating factor in M&A, more than doubling in importance from 4 percent in 2016 to 9 percent in 2018.

  • Expect an acceleration of M&A deals in the next 12 months, with deal size increasing or staying level.

  • Plan to engage in deal activities across borders, complicating cultural integration (90 percent of respondents are looking beyond the United States).

What are the new HR responsibilities in M&A deals?

M&A success hinges on the integration of people and culture, which is the domain of Human Resources. Optimizing M&A-related transitions requires HR to master the following areas of responsibility:

  • Identify and clearly articulate integration challenges – both cultural and operational—and their impact on success.

  • Shape an explicit integration philosophy and deliberate principles that drive strategic and tactical decisions, from name changes to organizational structures.

  • Assess talent requirements, the capacity and motivation of employees to deliver.

  • Lead the process for severing relationships with those no longer needed while avoiding legal issues and maintaining the integrity of the company.

  • Resolve disparities within the unified organization, such as compensation and benefits.

  • Ensure the flow of information across the organizations at each step of the process.

  • Continually assess the pulse of the organization and proactively intervene to seize opportunities and thwart issues.

 

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