A better approach to M&A

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The article "A Better Approach to Mergers and Acquisitions" in the latest issue of Harvard Business Review (May-June 2024) presents an interesting study of M&A trends over the last 20 years. The study indicates a notable shift, with over 70% of mergers and acquisitions are now succeeding compared to the reverse trend in prior years. Not surprisingly, two of the contributing factors were more sophisticated due diligence and better integration.

At Nua, we have worked with many companies on M&A due diligence, integration and (sadly, more often) post integration "clean up." It is imperative that HR play a central role in M&A from the moment of inception. Most companies hire one of the big firms to drive the work overall, but often the HR component is under resourced or staffed with junior consultants who don't have the expertise, leaving a large burden on the internal HR team. 

This can be especially tough on HR leadership given the confidential nature of the work, the expertise needed and the time intensity required. If M&A is on the horizon for your company, keep these key success factors in mind:

Determine your HR approach to M&A up front so you are ready to activate your team quickly

Ideally you have an "M&A playbook", but at the bare minimum identify who needs to be involved from the HR team, clearly map out roles & responsibilities and establish ways of working during a time of M&A.

Anticipate potential skill gaps

If you anticipate capability or capacity gaps in your HR team to support M&A, you may want to align with your deal team and/or C-Suite up front and build in the requirement to have dedicated external HR M&A support.

Determine your overall acquisition strategy from an HR perspective

What are the criteria you will use to decide the scope, degree and timing of integration? Think about mapping a target level of integration against M&A business goals and / or size of integration and aligning with leadership on the strategy up front.

Don't skimp on due diligence

More than just stacking up a side-by-side comparison of HR policies and benefits, make sure a thorough analysis has been done around the risks, impacts and subsequent effort to integrate. This analysis should provide the foundation for a preliminary integration & resourcing plan.

Prioritize rigorous project management

HR is notorious for operating in silos and the risk of this is even greater in an M&A scenario. Ensure you have a plan for who will be the primary lead, coordinating across all HR functions and with the overall M&A team.

Don't kick the can down the road

It's tempting to delay harmonization to minimize disruption, but disruption is inevitable and often the pain is greater with delay. Especially when it comes to key areas that impact the bottom line, such as benefits harmonization, shared job architecture, salary structures and systems consolidation. You may be better off "biting the bullet" and investing the time and resources into integration sooner rather than later.