Organisations going through M&A activities should focus on the “softer” people agenda or risk the deal derailing, according to a leading expert.
Scott Moeller, director of the M&A Research Centre at Cass Business School, was speaking on ‘Why M&As fail’ at a private dinner organised by HR consultancy 10Eighty.
Moeller said there are many things that can cause a M&A deal to go wrong, and that making the wrong financial decision was “probably the easiest” to fix. He explained there are three main areas companies tend to get wrong and that are hardest to recover from: poor planning, poor communications and poor people management.
“These [areas] are what people need to focus on when they are looking at M&A,” he added.
On planning, he said business leaders often fail to think carefully enough about their deal strategy in the first place.
On communications, he added: “People often get communications wrong because they are trying to communicate the right things to the wrong people, or vice versa. If you haven’t got a PR adviser your deal is less likely to get to completion than if you have a PR adviser.”
Moeller warned that once a merger is announced productivity instantly plummets because people worry about whether their jobs are safe.
“In the two weeks following the announcement of a merger the amount of work an employee does per day drops to between one and two hours,” he said. “Some people get so stressed they check out completely. Most people are standing around the water cooler trying to figure out what’s going to happen.”
Moeller added that when it comes to M&A deals, “the soft stuff is hard stuff” and HR teams need to be involved earlier in the process.