Essay About Own Use And Worldatwork.The Content

Human Resource
Essay Preview: Human Resource
Report this essay
In mergers and acquisitions, due diligence forms the base upon which
virtually all key decisions — both strategic and operational — are made.
Those involved in such transactions understand the importance of due
diligence in identifying potential “deal breakers” and any items that may
have a material impact on the negotiations or price.
However, once this has been accomplished, it is not uncommon for
due diligence activity and intensity to wane. This cuts short a process that
could be beneficial in other ways and leaves much important information
on the table — especially information that could influence integration
decisions and pave the way for a smooth integration process.
HR Involvement
Critical to M&A Success
41 WorldatWork Journal second quarter 2005
Robert A. Bundy
Mercer Human Resource Consulting
Contents © 2005 WorldatWork.The content is licensed for
use by purchasers solely for their own use and not for resale
or redistribution. No part of this article may be reproduced,
excerpted or redistributed in any form without express written
permission of WorldatWorkand appropriate attribution.
Reach WorldatWork at 480/922-2020;
[email protected]
Reprinted from WorldatWork Journal, second quarter 2005,
with permission from WorldatWork, 14040 N. Northsight
Blvd., Scottsdale, AZ 85260; phone (877) 951-9191; fax
(480) 483-8352; www.worldatwork.org. © 2005
WorldatWork. Unauthorized reproduction or distribution is
strictly prohibited.
This is of particular relevance to HR professionals
because they bear a significant responsibility for
integration. Ultimately, they have responsibility for
a host of “people” issues ranging from the integration
of benefits and compensation programs to workforce
restructurings, labor contracts/agreements and their
administration and the management of issues, such
as leadership, organizational culture and employment
practices. And yet they usually are not given access to
vital information surrounding these people issues until
far into the merger or acquisition process. Compounding
the situation, HR representatives often have not been at
the table with their colleagues from finance, operations
and other functional areas during the early stages of
discussion, decisions and due diligence.
A different approach to the due diligence process
can yield different and far superior results from an
integration standpoint. While a smooth transition
alone is an important goal, it also is the means to an
even more important end. As illustrated in Figure 1,
the faster a deal can be completed, the faster the
organizations involved can begin to realize the
full value of the deal.
Achieving M&A Success
There are three key factors to help an organization
achieve merger success, and people issues play an
important part in each:
0 Business logic – Why are we doing this transaction
and what needs to occur for it to be considered a
success?
0 Price paid – What is the economic baseline and
what improvements in post-merger performance do
we need to see in order to pay any premium in price?
0 Integration – How do we translate the strategy
to merge or acquire into real value?
Due diligence is intended to uncover the answers
to these three questions. It prevents organizations from
overlooking key issues and can significantly improve
the chances of the deals success. Specifically, due
diligence is performed to:
0 Discover issues that could be show stoppers
or “deal breakers.”
0 Find and investigate material issues that might
affect the price or be negotiating points.
0 Uncover and understand the data and information
that will influence decisions around integration.
Lets start by taking a look at how the due diligence
process plays out over the four stages of a deal, then
well address what can and should be changed from
an HR perspective to obtain better results.
Stages of the Deal
The first stage of a merger or acquisition often is
referred to as the courtship and