This article focuses on the merger of compensation and benefit plans in the new entity that results as a sequel to the merger of organizations. However, this aspect often receives attention only after the deal is struck. This can lead to added costs for the acquiring company if the associated costs are not worked out before the purchase price of the deal is finalized. Outlined here are some of the key aspects to consider while integrating the compensation and benefit plans of the merged companies.

Mergers & Acquisitions (M&A) activity has been increasing since the 1990s. The 1990s saw a lot of M&A transactions taking place in the US. Consolidation of the market is a common feature of mature markets. M&As are also fueled by deregulation, which gives a relatively free rein to the business players to take steps to grow in size, enter new markets, achieve greater efficiencies, reduce costs, and increase overall business capability. In recent years, it has been found that companies are more active in the European region. In future, it is expected that consolidation will increase in the Asian region as well. This is not to say that the US is no longer active in this area. But US companies are now tackling the postmerger phases of integration and solidification of the merged entities.

It has been found that a majority of M&As are financial failures, although the findings from different studies are slightly different, with the more recent ones arriving at more optimistic findings. The later findings may be a reflection of the fact that recent attempts of companies are based on better planning and management and better capability to manage the same. As companies gain more experience with M&A, they are more willing to learn from their past mistakes. One of the most important lessons from their past failures is that the lack of involvement of the HR team in the merger process is one of the key reasons for their failures.

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