We really like working with clients before they embark on a merger and acquisition. Whether they are a buyer or a seller, we are able to proactively assist our clients with everything employment related during the initial stages of an M&A deal. Our experience and expertise means that our clients are able to take advantage of all available avenues to maximise the financial benefit they obtain from the M&A and to ensure that the experience M&A experience for their employees – the very people who are most needed to champion the success of the M&A – is positive, reassuring and sets the scene for harmonious post-merger employee relations.

Our expertise includes assistance during the due diligence stage, advising on the transfer of entitlements considerations (which, if appropriately dealt with in the sale or purchase contract, can result in significant benefit to our clients) and how best to plan for the change taking into consideration the particular cultural aspects of the parties. It is unfortunately too late to change some things after the contract is signed so missing key considerations and the benefits that can result can significantly deplete the value of the transaction. We appreciate there is a lot to be done before, during and after a Merger or Acquisition but when the impact on employees is often so huge, the human capital element is not to be forgotten.

The human & people considerations of a Merger or Acquisition are just as important as the ‘hard’ considerations in determining the outcome or success of the deal. A buyer will want to see that that staff have employment contracts and that minimum obligations in relation to pay and other entitlements are being met, and no other employment related risks. There are of course other considerations such as other regulatory compliance, workplace relations, employee turnover, organisational values and culture (which is really a task on its own), leadership capability, remuneration and benefits, transferrable instruments – and whether they will also apply to new non-transferring employees after the M&A, employee engagement and workforce planning just to name a few. It is important that many of these issues are dealt with in the sale or purchase agreement but also to ensure smooth a transition or determining whether the deal should go ahead.

Employee turnover or lack of retention is one of the key considerations. PwC’s 2020 M&A integration survey found a large decrease in respondents reporting significant success around employee retention, dropping from 56% to 10% in 1 year! This phase of the M&A process helps to identify and address issues early. In research undertaken by Bain & Company, it demonstrated that in deals classified as successful, nearly 90% of the acquirers had identified key employees and targeted them for retention during due diligence or within the first days after announcement. By comparison, this task was undertaken in only a third of unsuccessful deals!

Remember also that consultation obligations may need to be followed, however, consultation with employees is not only a requirement but beneficial for involvement, engagement and acceptance.

Industrial relations isn’t the only pre-merger consideration during the due diligence period. Consideration should be given to whether the targeted organisation’s culture, through cultural assessment, can be integrated (‘integro’) with buyer’s organisational culture and an understanding how to move towards the culture that fits with the new business strategy moving forward for growth.

This will avoid a mismatch between organisational cultures without a plan for culture fit, making the post-merger coexistence really difficult. The company’s organisational culture is the most powerful resource for attraction, recruitment, and retainment – this is no different for the acquiring company following the M&A. Having a plan to take employees on the journey of an M&A before embarking on it, through change management, will ensure success.

Ensuring Leaders are prepared, understanding the scope of the change, assessing readiness for change, developing key messages & communications and identifying change champions and more is all part of the preparation.

Contact us now to discuss how we can assist. Let us help you integrate for growth at Intégrowth.

At Intégrowth, we know how to maximise post-merger or acquisition gains by highlighting industrial relations considerations at the contract drafting and due diligence phases and planning for change.

We assist with contract drafting and input in sale or purchase agreements, due diligence from a holistic people perspective, industrial relations consideration & support as well as the planning for the change and cultural assessment.