Getting ready to close on a big deal? Take a look at people and processes.
mergers and aquisitions, m&a

 

 

Deciding to pursue a merger or acquisition takes careful deliberation. When evaluating potential opportunities, investors consider an array of factors, including a bevy of financial metrics, chain scale/brands, geography, management team and strategic fit, among others. Careful consideration of these factors helps to ensure that a transaction will provide the long-term ROI that operators, owners and investors are seeking.

 

That’s why another factor deserves serious consideration. A fresh look at the HR side of the business – specifically talent and processes – can help operations merge smoothly and create unexpected value. Ensuring that the acquired company is functioning in a healthy and efficient state can even provide a cushion of a few basis points from the start, which help owners and investors increase the value of their investment as quickly as possible.

McKinsey & Company released research that proved organizational health matters immensely in the M&A context. Their research found a strong correlation between the pre-close organizational health of the acquirer and the post-close financial performance of the newly combined company.

Here are a few ways an effective HR partner can ensure that your company has the organizational health it needs to see the other side of a successful transaction.

Selecting the best candidates for the job

Having the right talent is one of the most important organizational health factors in creating large-deal value. When institutional loyalty and the history of long-standing personal relationships come into play, decisions about employees can be particularly fraught during a merger.

A seasoned HR partner can look to your employee pool with an outside perspective to help you select the right employees from both the acquiring and acquired companies. With expert help, you can trust that the decision on who is “in” or “out” was well thought out and fair.

Maintaining legal and regulatory compliance

Despite a thorough due diligence process, it’s not uncommon for an acquiring company to discover its new properties have failed to comply on a number of HR, benefits and employment compliance fronts. One reason is that internal HR staff, traditional payroll bureaus and SaaS providers often fail to see and flag compliance issues, which may be viewed as self-incriminating. Whether the issue is payroll or employment taxes, ACA and benefits related regulations, or one of hundreds of wage and hour guidelines (local, state and federal), it is essential to enlist a qualified HR partner to provide an objective review, identify gaps and deploy proven processes to ensure compliance.

Upholding rigorous internal processes

Finally, it should come as no surprise that running a tight integration process would pay off for companies going through an M&A. Internal discipline starts with a strategic approach to screening the deal for all potential outcomes, continues with providing clear metrics on a target company’s financial position and proceeds through pre-close planning and beyond.

To ensure that your company is running a tight ship as you approach an M&A deal, internal behaviors should be enforced to their fullest effect. Turning to an HR partner here can help you:

  • Make sure employees clearly understand their roles and responsibilities.
  • Manage payroll, compliance, benefits, tax and benefits to ensure they roll over smoothly.
  • Keep performance goals in check and on a consistent timeline.

When searching for an HR partner to help stabilize the health of your organization, insist on a company that understands both the demands and the unique challenges of M&A integrations. A solid HR partner that has a strong demonstrated track record can help you create maximum efficiency and save potentially hundreds of thousands of dollars.