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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 est le responsable mondial de l’activité Workforce Transformation. Il est membre du comité de Direction Global de l’activité Capital Humain et du comité de direction du Consulting, il dirige ... 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