· 1 min read · Features

HR's role in mergers and acquisitions

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With an improved economic outlook comes business growth. And with growth: increased merger and acquisition activity.

Yet those HR professionals whose most recent experiences are of helping to downsize their business have limited, or even no, experience of managing such a momentous and complex process.

“What we saw in the recession was often big businesses would dispose of non-core divisions. So HR might have been involved in carving out a business for sale but then maybe not in buying a business or doing a major sale,” says Sally Dixon, director of HR transaction services at PwC. “Now we’re seeing more big mergers than in recent years.”

“Not many HR professionals have experience of acquisitions. They don’t happen all the time, especially recently,” she continues. “They might have some of the skillset needed for coming in and looking at another company, assessing some of its policies and looking at the planning for integration. But they perhaps won’t have some of the specifics regarding the complexities around TUPE requirements, and being able to prioritise what is really critical at different stages of the transaction.”

Here, according to Dixon, are some of the most important considerations HR directors need to bear in mind when working with M&A deals: 

  • HR should be involved at the very early stages of any merger or acquisition. “Historically there has been a tendency to involve HR very late and it doesn’t have the same influence then,” says Dixon. “HR needs to be involved to quantify the financial aspect of the people issues. You’ve got to consider hidden liabilities such as pension costs and benefits.”
  • Considering how you’ll retain talent at the company being acquired or merged with is key. “That’s particularly the case in certain sectors where you’re really buying people’s skills,” says Dixon.
  • Devise a definite strategy on the extent you’ll integrate the businesses.
  • Consider how the subtleties of the two companies’ cultures will mesh. “Not doing that is a really common reason for deal failure,” reports Dixon. “This can be particularly challenging if you’re an international business.”
  • Don’t neglect your core business’s ongoing HR activities while focusing on the acquisition or merger. “Your own department might have been cut back to the bone. You’re already busy and suddenly you have this extra venture. So the big danger is everybody is so focused on integration that the business as usual tends to slip by the wayside,” warns Dixon.

Further reading

Can HR remember how to lead in an upturn?

Learning from the lessons of the recession