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M&A - Human Capital

Managing HR Risks in M&A

Accès rapide

Most of the barriers to a successful integration are related to people and company culture

•  Gap between the business strategy and employees’ objectives and behaviors;

•  Liabilities linked to employee benefits and compensation challenges;

•  Employee engagement issues leading to less productivity and higher turnover;

•  Basic processes essential to team performance functioning are not successfully effective;

•  Gap between the cultures of the two companies not assessed and leadership unclear on the attributes of the desired company culture that aligns with the overall business strategy post M&A.

 

To ensure a successful integration, it is crucial to identify potential HR risks which can impact the cost of the integration, and have the answers needed to launch responses to these risks

•  Strategic: Identify business needs in terms of headcount, secure separation plans, retain key people, maintain employee management.

•  Cultural: Execute an issue-free transition, avoid cultural gaps and ego clashes, ensure positive image within and outside of the company

•  Organizational: Streamline HR organization structure and critical processes, design the best way to restructure the company

•  Financial: Rapidly capture HR costs and synergies, evaluate employee liabilities and terms & conditions

I- Pre-bid

Make a Go/No-Go decision (LOI, NBO, BO, exclusivity)

HR profile of the target company:

•  Summary of the HR situation and social risks within the target
•  Portrait of the key managerial and expert people
•  Summary of HR KPIs to be valued in the put option
•  Key stakeholders mapping
•  First estimate of the target’s capacity to reorganize and move forward

 

II- Due Diligence

Estimate HR costs and debt impacting the value of the transaction

Estimate costs affecting the valuation of the target: Employee social debt and cash-out (benefit plans, pensions plans, medical plans, profit sharing scheme, share ownership, etc.):

•  Top executive package and LTI
•  Employment contracts and working conditions
•  Compensation and Benefit plans
•  Severance and change-in-control payments
•  Assess feasibility from an HR perspective
•  Estimate Post-deal restructuring costs
•  Quantify and qualify risks and synergies (e.g. Cultural differences Assessment, identification of structural/operational challenges)
•  Anticipate social strategy and calendar
•  Social climate

III- Pre-closing

Ensure deal completion/social agenda

Ensure the buyer is ready to present the object to employee representatives:

•  Support in relations with employee representatives
•  SPA review and TSA preparation
•  Action plan for Day1 and takeover phase
•  Social strategy for the acquisition to reassure the buyer that HR aspects will be well managed, limiting its reputation risk
•  Monitor PPA achievement (debt adjustment)

 

IV- Post-Merger Integration

Set up HR conditions to ensure value and expected synergies

Ensure Day 1 Readiness:

•  Implement and secure HRIS
•  Apply expected HR plans linked with the acquisition strategy (restructuring, integration, employees transfer, etc.)
•  Monitor and coordinate HR activities (collective relations, legal requirements, etc.)

Secure Takeover phase:

•  Deploy cultural and change integration action
•  Align HR governance, HR structure, HR processes & tools
•  Adjust leadership and performance models
•  Define compensation strategy and design physical environment

Boost Integration:

•  Monitor integration projects on HR aspects
•  Support social harmonisation (design job evaluation system and grading, compensation policy, structure of package, profit sharing plans, healthcare, working conditions. etc.)

M&A and Human Resources Risks

Successfully managing people in an M&A context

M&A - Capital Humain

Etude sur l’impact des aspects RH et sociaux

Nos experts

Philippe Burger

Philippe Burger

Associé Conseil, responsable Capital humain

Philippe a près de 25 ans d’expérience en matière de gestion des ressources humaines. Associé en charge des activités Capital Humain, il dirige les différents domaines de conseil RH du cabinet : rétri... En savoir plus

Fabien Richard

Fabien Richard

Associé Conseil, co-responsable Capital humain

Actuaire de formation, Fabien a près de treize ans d’expérience en matière d’avantages sociaux. Associé Capital humain, il est co-responsable de cette activité et est également en charge de l’activité... En savoir plus