Human Resources Mergers and Acquisitions Checklist

In the modern world, M&A deals are becoming more and more widespread. In this article, we are going to discuss the role of human resources during transactions.

Human resources in M&A deals

The number of M&A deals is constantly increasing. Thanks to such deals, many companies have the potential to increase their competitiveness, take a leading position in the market, and get more financial profit. However, despite the potential benefits, M&A is a risky and complex procedure that must be carefully planned from the outset.

When analyzing the problems of companies in M&A, it is important to note that almost half of all transactions do not achieve the desired effect due to insufficient attention to issues of human resource management. Mergers and acquisitions entail major organizational and structural changes that affect the work of the entire organization, and especially its employees. Typically, companies recognize the key role of people in the success of mergers and acquisitions; however, people management issues are often overlooked or underestimated during pre-transaction due diligence, for example, when compared to financial performance or market prospects.

Since deals of this kind are being prepared for more than one month, HR managers have time to realize their tasks and plan their work. In each such project, there is a leading company and a company to be absorbed – this determines the essence of the integration process for them. But the role of HR specialists is the same: it is necessary to overcome the resistance of personnel and motivate them to actively participate in the processes of change, thereby contributing to an increase in business efficiency. To do this, HR managers of both companies need to take a comprehensive look at the process of upcoming changes, predict the reaction to them, and ensure the loyalty of their company’s employees to the integration and workflow throughout the project.

Human resources checklist for successful deals

Among the factors that unite successful acquisitions, there are also those related to the human resource management system. So, the human resources mergers and acquisitions checklist includes:

  • priority of efficiency in the selection of personnel. The fate of the deal depends on who will be appointed to responsible positions. If for the success of the “new company” it is desirable to hire new top managers, this must be done without fear of causing discontent among the employees of the company;
  • consideration of differences in corporate cultures. The Economist Intelligence Unit’s analysis of 150 mergers found cultural assimilation to be the most challenging issue in business combinations. Therefore, the formation of a new corporate culture becomes the key to successful integration;
  • a strong team carrying out the integration is formed from the most experienced heads of departments who are the best in coping with their tasks, and the most professional ordinary employees;
  • taking care of employees. During the integration period, employees are worried about their future: will they be fired, how will they work next? To relieve stress, it is necessary to complete all the reshuffles as soon as possible and constantly inform employees about what is happening in the company;
  • communication with employees. When a company goes through a merger process, it’s not just what you communicate about, but how often you do it that matters. In companies with successful merger experience, managers communicated information to subordinate employees and engaged in dialogue with them.

It means that specialists in human resource management need to be involved in activities for the implementation of mergers and acquisitions, not only at the stage of actual implementation but also during their planning.