Merger and acquisition activity is unlikely to slow down anytime soon, in part because it’s a speedy way to pick up talent.
A new study of mergers and acquisitions shows that businesses, reluctant to spend the time to develop people, are increasingly willing to acquire management and technical talent by joining with another organization.
“Effectively, what they’re doing is trying to become dominant in their marketplace and they can only do that by buying talent,” said Ken Frers, of PricewaterhouseCoopers, the firm that conducted the global survey of 125 companies that had recently completed a merger or acquisition.
The research revealed 47 per cent of companies cited access to technical talent as a top deal driver, up from just 33 per cent in 1997. Talent acquisition was the fourth most cited reason for proceeding with a merger, behind access to new products, growth in market share, and access to new markets.
And while people have become an important impetus for mergers and acquisitions, they continue to be a major challenge in effecting a successful merger. Here too, speed is the key word. Companies that hope to realize post-deal financial success must move quickly to blend cultures and operating styles, the report stated. Companies that don’t move quickly will face morale and productivity problems as well as greater difficulty integrating management systems.
Sixty-six per cent of companies reported difficulty in integrating operating philosophies, up from 47 per cent in 1997. Management practices also continue to prove difficult to integrate with 57 per cent reporting they had problems doing so, up from 41 per cent in 1997.
The instability and uncertainty that almost always follow a merger often lead to post-deal depression, said Frers. A problem made worse when the organization lacks direction or gets bogged down in process.
As quickly as possible, find out the concerns of key people and move to address them. “Identify who the key stakeholders are and identify what their issues are,” said Frers. Bring together groups of 15 or 20 people, ask them their concerns and what they think about the deal.
Once that is done, make sure employees are kept up-to-date on developments.
“Good communication is at the heart of every successful merger,” said Frers. “In the absence of communication people assume the worst.”
Companies also need to move quickly to pinpoint their value drivers and focus on merging those initiatives rather than along functional lines. Businesses do a great many things but typically 20 per cent of an organization’s initiatives drive 80 per cent of the value, said Frers. Identify those activities that drive value and focus on them as the merger proceeds. Create transition teams of three of four people for each of those initiatives and commit to merging those initiatives rather than departments which is the normal practice in a merger or acquisition.
“Inaction builds instability,” said Frers. “Once you show why the deal was done and that you’re chasing value, it creates a level of enthusiasm,” he said. Morale will go up and employees will feel better about their futures. The study found that 72 per cent of companies that implement transition teams early in the merger process noticed a positive impact on retention, while just 18 per cent of those that waited until later in the process noticed the teams had a positive impact on retention.
A new study of mergers and acquisitions shows that businesses, reluctant to spend the time to develop people, are increasingly willing to acquire management and technical talent by joining with another organization.
“Effectively, what they’re doing is trying to become dominant in their marketplace and they can only do that by buying talent,” said Ken Frers, of PricewaterhouseCoopers, the firm that conducted the global survey of 125 companies that had recently completed a merger or acquisition.
The research revealed 47 per cent of companies cited access to technical talent as a top deal driver, up from just 33 per cent in 1997. Talent acquisition was the fourth most cited reason for proceeding with a merger, behind access to new products, growth in market share, and access to new markets.
And while people have become an important impetus for mergers and acquisitions, they continue to be a major challenge in effecting a successful merger. Here too, speed is the key word. Companies that hope to realize post-deal financial success must move quickly to blend cultures and operating styles, the report stated. Companies that don’t move quickly will face morale and productivity problems as well as greater difficulty integrating management systems.
Sixty-six per cent of companies reported difficulty in integrating operating philosophies, up from 47 per cent in 1997. Management practices also continue to prove difficult to integrate with 57 per cent reporting they had problems doing so, up from 41 per cent in 1997.
The instability and uncertainty that almost always follow a merger often lead to post-deal depression, said Frers. A problem made worse when the organization lacks direction or gets bogged down in process.
As quickly as possible, find out the concerns of key people and move to address them. “Identify who the key stakeholders are and identify what their issues are,” said Frers. Bring together groups of 15 or 20 people, ask them their concerns and what they think about the deal.
Once that is done, make sure employees are kept up-to-date on developments.
“Good communication is at the heart of every successful merger,” said Frers. “In the absence of communication people assume the worst.”
Companies also need to move quickly to pinpoint their value drivers and focus on merging those initiatives rather than along functional lines. Businesses do a great many things but typically 20 per cent of an organization’s initiatives drive 80 per cent of the value, said Frers. Identify those activities that drive value and focus on them as the merger proceeds. Create transition teams of three of four people for each of those initiatives and commit to merging those initiatives rather than departments which is the normal practice in a merger or acquisition.
“Inaction builds instability,” said Frers. “Once you show why the deal was done and that you’re chasing value, it creates a level of enthusiasm,” he said. Morale will go up and employees will feel better about their futures. The study found that 72 per cent of companies that implement transition teams early in the merger process noticed a positive impact on retention, while just 18 per cent of those that waited until later in the process noticed the teams had a positive impact on retention.
