What is HR's Role in M&A?

Mergers and acquisitions in today's world is a very complex issue. If you look at history, 50% of all acquisitions fail within the first 2 years. Why?, because there is a failure to fully assess the target company to determine if it:

1. fits into the organization, and how it fits, stand alone, integrated, or subsidiary;
2. the proper due diligence is not done;
3. culturally does the target company fit into the organization;
4. is there a clear integration plan, fully defined, time lined, and stuck to;
5. has all the employees been fully examined and determined to be part of the new company.

These and many other questions are not fully answered in the pre-due diligence process. So the question can be asked, what is human resources role in all this? Well talking from experience, if HR is not on the front end of the process the chances of the acquisition to succeed becomes less viable. So, for all of you in HR, you need to be on the front end of the process to assess these very elementary questions and steps.

In the due diligence, a seasoned HR professional should view all the information in the data room the same way that a financial person views the data. There are hidden elements in the balance sheet, costs hidden behind non-related elements and most of all, the employee population needs to been clearly sifted out and analysed.

Having done more than 50+ acquisitions in my 20+ years in HR I can attest that if you do not take a lead role in the entire process, the chances of the integration of the acquired business will go astray. Each of you need to think hard and discuss with your CEO, COO, CFO the role you have in M&A and if it is not a lead role then you need to be there, just like being at the table with the other senior executives.

Over the years I have developed a complete set of guidelines, items to analyse, plan techniques, and above all a financial approach to due diligence. There are some companies out there that really know what they are doing and have a methodical approach to M&A. The two that immediately come to mind are GE and Cisco.

So, what are your thoughts on this very important topic and please feel free to comment or email me at wgstevens2@gmail.com

A comment from a viewer:

I love the blog. I find it refreshing and informative. It gives us HR professionals an injection of knowledge, we probably already know or are aware of, but do not take the time to refine.I very much enjoyed reading the information and plan on continuing to read.