Why is it important to act on people-related and cultural challenges when buying or selling a business?
Leaders today are under more pressure than ever to deliver on employee engagement, legal compliance and environmental, social and governmental footprints. Recent global events have made these topics even more important. When it comes to buying or selling a business, getting it right on vision, control, people and deal value is crucial. Keeping all these aspects in mind while dealing with a merger, acquisition, joint venture or restructuring can be more tedious than ever. Around 69% of deals (buying and selling of a business) fail to achieve their deal objective and deliver on long-term shareholder value. While there could be a variety of factors at play, M&A experts and deal executives say that people-related challenges are the most common in a deal failure. Without a strategy focused on employee value drivers and getting it right on the people and culture agenda, this can easily lead to issues with legal non-compliance, loss of key talent, high(er) attrition rates, employee disengagement, cultural misalignment, loss of productivity, and as a result, a failed deal. We strongly believe that if addressed properly and at the right time, these challenges can be turned into opportunities.
In order to enable value drivers and make the deal a success, it is imperative to have a dedicated focus on the people aspects of a deal. Not only is every deal unique, each stage has its own set of challenges and requirements:
- Before signing, you want to influence the deal price, mitigate risks and harness people opportunities. Sellers and buyers want to know all the insights and make sure that they are properly incorporated in the Share Purchase Agreements (SPA) and Transition Service Agreements (TSA);
- Before closing, you want to prepare your company and employees for the transition (e.g. separation or integration) and get the business ready for Day 1;
- Post-closing, you need to execute the deal and start realising the synergies. Employee resistance to change, cultural differences, compensation & benefits packages which are not harmonised, the loss of key personnel and executive management not being a good fit for the new company can impede your desired outcomes.
As such, being proactive in identifying and addressing people-related issues as well as bringing important stakeholders (employees, works councils, management, unions etc.) along on the journey can significantly help you achieve the deal strategy and desired outcomes.
How can we help you with all the relevant HR aspects of a transaction?
Over the years, we have built a robust framework to handle the people-related issues. We focus on de-risking and driving deal value with a strong focus on the people side. We work closely with our clients throughout the deal lifecycle on all the relevant HR aspects of a transaction. Our offering focuses on unlocking the human potential for value creation, in joint ventures, integrations, separations, and organisational restructurings. The topics we cover range from identifying risks in due diligence, to designing a people strategy for the deal, to harmonising employee terms and conditions, to managing the integration and cultural changes for employees. For example:
Delivering a thorough people (HR) due diligence report highlighting value creation and synergy opportunities. The scope of work includes (not limitative): workforce overview, key personnel, labour relations, talent, compensation & benefits, pensions, culture and HR service delivery.
Hosting workshops to educate on the local and global terms and conditions and best practices for harmonisation.
Creating a Day 1 readiness plan to navigate employees in their new world. The Day 1 readiness plan considers all topics from a strategic (what’s your people strategy?) to an operational (where is my laptop, where do you sit, how do I know who my colleagues are?) level.
Leveraging the 9-levers model and U Collaborate sessions to get leadership alignment on the people strategy that would facilitate the overall deal strategy.
Designing an operating model and organisational structure (including detailed role profiling) leveraging Powered HR and other data-driven tools.
Our HR deal-related services
Quick access to our experienced HR experts
The people in the M&A team will work hand in hand with you to advise and support you, with a mission to unlock the human potential within a deal. We also leverage our colleagues, our international KPMG network and our external partners for expert guidance and knowledge. We work in collaboration with you to customise our offerings to fit your needs and align with your overall deal and HR strategy. The team is data driven and constantly strives for innovation and value add in their delivery. We bring a lot of experience and a global perspective, with a very local and customised approach for each of our clients. Through helping other organisations mitigate risks and grasp opportunities, we can drive positive, sustainable change for you, your business, your people and society at large.
