The HR consultancy's report shows a drawn-out integration process and the loss of key talent can erode the value of a deal by between 5.6% and 12.8%. Hewitt estimates this could have cost EU companies 12.5 billion euros.
Some 92% of employers cited human capital challenges, such as cultural fit and leadership selection, as the primary reason for merger deals failing.
Only 7% of European companies involve HR in target selection, compared with a global average of 36%. Less than a quarter of European businesses (24%) involve HR in the drafting of a sale or purchase agreement, compared with 43% globally.
Stephan Vamos, European practice leader, corporate transactions and transformation at Hewitt Associates, said: "Companies cannot afford to ignore the human element of deals. This has been an established fact for some time but it still continues and by doing so, companies are costing themselves millions and limiting the potential success of a deal before it has even closed.
"Mastering the more complex aspects of due diligence and integration will be vital for companies as these are the most powerful drivers of deal value. With early signs emerging of new merger and acquisition opportunities after months of inactivity, now is the time for companies to revise their approach. Failure to act will ultimately undermine the long-term financial health of the company."
Flawed people management wastes billions' in merger and aquisition deals
European companies are "throwing away" billions of euros by not addressing people management issues during mergers and acquisitions, according to Hewitt Associates.
