Whether it’s your first, second or 50th deal, when it comes to addressing people in mergers and acquisitions (M&A), the unexpected can often happen. Limited data, aggressive timelines and different organizational cultures, to name a few, can lead to sudden and significant challenges, even for the best laid plans. The last thing you want is for one area of the integration to cause a delay in the deal’s close or, even worse, the failure to meet deal commitments and strategic objectives. Yet, people issues — from leadership style to total rewards — can be responsible for a failed deal either at the onset or post-integration.
The people aspect of M&A is hard to get right. Perhaps this is because people are complicated and related challenges cannot always be solved by a simple formula or templated solution. These challenges require an understanding of business strategy and practical knowledge of how HR programs and processes work to effectuate change.
“As demand for talent soars, companies continue to use M&A transactions to acquire critical talent and shore up their own skills gaps,” comments Perry Papantonis, partner, Human Capital Solutions, Aon. “It is therefore important for firms to ensure they are prepared to address key people challenges that emerge before, during and after a deal is closed.”
According to Aon’s M&A Risk In Review 1H 2022 report, more than two-thirds of companies are expecting global M&A deal numbers to increase over the next 12 months; that includes 38 percent who anticipate an increase of more than 5 percent. The technology, media and telecommunications (TMT) sector is cited as the most prolific in making deals, with financial institutions, life sciences and healthcare sectors also high on the list. While M&A has ebbed and flowed due to economic and geopolitical uncertainty, the bigger picture shows an active market, coupled with an abundance of capital in the system for both corporate and private equity to fund deals. Key drivers include the need to transform capabilities and innovate, supply chains, digital transformation and disruption, and talent shortages caused by the Great Resignation.