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Due Diligence and Integration Best Practices

Updated: Feb 27, 2023

Buyers are waking up to the reality and importance of M&A HR due diligence. M&A HR due diligence and integration is not a function that can be ignored. Executed correctly, it can accelerate post-integration efforts. Executed poorly and you may not see the ROI you expected. Scott Ker shares his high-level integration due diligence best practices.

1. Determine the new organisational structure before Day 1

Before Day 1 arrives, it is imperative that the new company structure is clear, and people are advised about their roles and responsibilities. M&A Day 1 is not the moment to start wondering if you have the right people in the integrated workforce. Do not ignore the human element until it is time to unite forces and work together. Fortunately, when conducting HR due diligence this will be one of the first tasks to be discussed. Basic organisation structure is the highest-level transaction you need to think about, having the right people in the right jobs, in the right locations.

2. Tackle integration challenges head-on

One of the more challenging aspects of restructuring will be addressing double job positions. It is common during mergers and acquisitions for employees to find themselves in this conundrum. How you tackle this sensitive issue can determine your retention rate. Are they ways you can keep top talent by creating new positions? Or altering their job title and or responsibilities to lessen friction? Middle managers are especially vital. You need them for the M&A to proceed. This is where working with a seasoned HR due diligence expert who knows how to provide communication tips can become quite valuable. You are going to have to address integration if there are two people for each job. There are some jobs that are different, and you will have to think about that specific change.

3. Establish how you will address employee concerns

Senior management is often aware about the finer details of the M&A deal. They know where they stand in terms of job stability, compensation, and prospects within the soon-to-be amalgamated company. Unfortunately for employees in the organisation, they might not be privy to what management are doing. Therefore, if they catch wind of the merger or acquisition before they are properly informed and given a chance to air their concerns, panic can arise. During HR due diligence, you must identify the key influencers and middle managers so they can be included to help with integration communication and ease the employee transition. The first question employees will ask is, “What’s in it for me?” The second one is, “What’s needed from me?” There is going to be a change. Buyers must be sensitive about what is changing for whom and how?

4. Do not ignore cultural incompatibility

Cultural clashes and or incompatibilities are some of the biggest causes of poor post-merger integration. M&A HR due diligence is the perfect time to assess the target company’s culture i.e., how business is done in the company, what the employer/employee/client communication styles are; alongside the values and attitudes adhered to by all in the company. Do not ignore the cultural red flags that you identify at this stage. If there are areas that are likely to pose a challenge once integration starts, then sound strategies (such as hiring M&A HR specialists for a season) need to be developed prior to Day 1. Culture has got to be practical and pragmatic.

Best Practice

For Acquisition Day 1 to go smoothly, the work begins with thorough and careful planning of how you will manage the human element. If you are thinking of an M&A and need to discuss your options with an expert, do not hesitate to contact Scott Ker, your experienced M&A Advisor, today.


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