Mercer has developed and released it’s very first Mergers & Acquisitions (M&A) Global Report, which contains a primary focus on people-related risks in M&A transactions.mergers acquisitions

According to the report, people-related risks remain top of mind for both buyers and sellers, including employee retention, cultural integration, leadership assessment, compensation and benefit levels and overall talent management.

The report’s goal is to enable business leaders, both inside and outside of the HR function, to make more informed people decisions in a challenging global deal environment.

For Buyers, key Mergers and Acquisitions considerations are as follows:

  • The assessment of leadership team and employee capabilities are achieved through skills inventories and competency assessments.
  • Development of effective retention strategies should be considered within wider programmes for staff retention, by segmenting key stakeholder groups beyond the executive.
  • Provide a clear culture, communications and change management plan, which features transparent and frequent communication, which should seek to minimise
  • Evaluate HR service, delivery and design needs, in order to ensure basics are in place to deliver pay and benefits, whilst positioning HR to enhance business results.
  • Adopt an enterprise or global view to effectively manage benefits, utilising a comprehensive global governance strategy, which thereby avoids unnecessary costs.
  • Understand the market competitiveness of rewards and leverage reward programmes to attract and retain talent, including base pay and other metrics.

For Sellers, key Mergers and Acquisitions considerations are as follows:

  • Identify critical employee groups and consider a retention programme targeting employee groups that provide influence to customers.
  • Leveraging experienced sell-side advisors and separation specialists undergoing a thorough seller’s due diligence process, can help to improve the sales process and boost the purchase price.
  • Consider providing a sensible, appropriately priced ‘Transition Services Agreement’, as such arrangements can mitigate reputational risk, cover costs, and create an orderly exit.
  • Document a clear talent management and staffing plan to establish and communicate the infrastructure of the entity being sold, and determine which employees will stay and which will join the new organisation.

Cameron Hannah, Market Business Leader for IMETA (India, Middle East, Turkey and Africa), Mercer, said, “With the relatively slow economic growth in Europe and North America, many organisations are seeking higher growth opportunities by making acquisitions in the Emerging Markets. One of the keys to successful acquisitions is people issues. Most decisions are made based upon financials however execution is in the hands of the leaders who need to be aligned and motivated to deliver the business and thus an active people strategy is needed in an acquisition.”

Ake Ayawongs, Region M&A Business Leader for Growth Markets, including the Middle East at Mercer, said, “The readiness of organisations’ in emerging markets to effectively address the people-related M&A issues is critical to the success of their business growth plans and confidence to further expand across borders. The good news is that more and more acquisitive companies are putting in place thorough internal HR M&A processes to address people issues in transactions. There remain significant opportunities for emerging buyers and sellers in the region to strengthen their capabilities for managing people risks more proactively in their present and future M&A transactions”.

Key outcomes of the report are numerous figures that demonstrate how organisations can successfully drive value from several key people-related areas. The report has drawn its conclusions from robust data and carefully considered analysis carefully compiled and interpreted by Mercer. Survey responses are drawn from both the buy and sell sides, with interviews from HR executives, private equity, finance, corporate development, and operational leadership. The study included 78 interviews with corporate and private equity clients, investment bankers, and M&A advisors. It comprises analysis of nearly 450 transactions, over half of which were cross-border. The research behind People Risks in M&A Transactions echoes Mercer’s 70+ years of experience managing deals for both financial and strategic clients around the globe.