The failure of several Mergers and Acquisitions (M&As) has been a matter of concern. HR issues are a key factor in unlocking value through the M&A route. This article inter alia discusses the reasons for M&A failures, the role of HR professionals in M&As and the strategic initiatives HR could take so as to heighten the likelihood of M&As delivering the expected results.
Organizations around the globe pursue Mergers and Acquisitions (M&A) as a means to strengthen their competitive position. On an average, in the last five years, we have witnessed over 25,000 such deals a year. In addition, the value of the deals struck has steadily increased. Yet, several surveys and studies reveal that a vast majority of merger and acquisition deals fail to unlock value. Research conducted by the Mercer Human Resource Consulting Group indicates that 80% of M&A result in failure. According to McKinsey and Company, almost 70% of these deals fail to realize any synergy. The role of HR professionals assumes importance in the context of an increasing number of Indian companies resorting to global acquisitions.
Typically, the merger and acquisition process has four stages. Each of these four stages is punctuated by legal milestones. These four stages are: Deal preparation, due diligence, integration and assessment. Deal preparation is the first stage and it occurs when a company is exploring options of companies to forge a deal with. Companies evaluate all options and determine synergy in conducting business as a single entity. Due diligence is the second stage in which both companies negotiate the contract and go public with deal agreement and announcement. This is also the stage where companies assess the risks involved in the new tie-up. Integration is a crucial stage as it involves planning and execution. Usually, this is the most challenging stage as most deals fallout at this stage and companies come to terms with the fact that the expected results would never be realized. For companies that cross over and settle down in their merged status, assessment is a way to measure performance and learn from past experiences. |
