HR DUE DILIGENCE AND INTEGRATION PLANS FOR M&A PROJECTS

​HR Due Diligence

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• The Due Diligence process is a common part of business acquisition or merger projects (M&A). The Due Diligence process usually involves an examination of the financial and legal aspects of the business to be acquired to obtain as much clarity as possible regarding the financial health of the business, its existing partnerships and identify potential risks or complications that may influence the acquisition / merger decision. or influence the price / value of the transaction.

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• The role of HR Due Diligence in the overall Due Diligence process is to conduct analysis of the organization's human capital by assessing both the existing company structure and the adequacy of available labor resources, remuneration and other policies and traditions; trying to identify company culture and risks associated with the transaction; recognize key people / knowledge / skills critical to uninterrupted business continuity.

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• HR Due Diligence research must be able to provide the project team with quality insights into potential risks, complications, or potential additional costs that could affect the total value of the transaction. For instance -

  • ​The difference in salary levels between the parent company and the company being acquired, which may have an effect on the salary budget for the next period or create tension between the new and existing team.

  • Insufficient manpower / qualification to achieve planned turnover and profit.

  • Promises made by previous owners to increase bonus payouts or salaries without having made adequate accruals for execution.

  • Recent labor disputes or litigation cases that will become responsibility to new owners.

  • Critical differences in management approaches / cultures to consider when planning team integration.

  • Absence or missing information about an important area, etc.

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​Integration of the new team

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• A merger or change of ownership is a time of worry and uncertainty for employees. Sufficient and appropriate communication with employees both before and after the merger is essential to ease this difficult period.

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• Employees look forward to the new company status, and usually the first period after a change of ownership is filled with positive expectations and enthusiasm. It is important to manage the transfer process smoothly and in a planned manner so that teams do not experience frustration and disappointment that directly affects the performance and business results of the company.

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• Well planned and managed integration period is critical after merge or acquisition is completed. There should be clear plan for first 3-6 months how new colleagues will be on-boarded and how we will ensure smooth integration of both teams and business processes into new culture. We can help you to develop the plan and lead the Integration phase as part of your M&A team.