The Dynamic Role of HR During a Merger & Acquisition
Mergers and acquisitions bring a wide array of emotions to the workplace. For some workers, it brings pride and excitement. For others, mergers and acquisitions bring about anxiety, selfishness, and grief. These complex emotions are challenging to deal with. If you want a successful merger or acquisition, you need to focus on the people involved- that’s where HR comes in.
What’s Your Merger Strategy?
Before you begin to think about a merger or acquisition, look into your merger strategy. According to Deloitte, there are four types of mergers your team might be trying to accomplish.
The most aggressive type of merger is the transformation merger. Transformations seek to bring two companies together under a completely new company. With a transformation, you try to blend the two organizations, trimming away the redundancies as necessary. Your goal? Get the best of both companies under one new roof.
Companies looking to increase a global footprint or connect with a new region might consider an expansion merger. These mergers increase their name recognition by connecting with other companies who know the landscape they are getting into. With an expansion, you are acquiring a similar company, but you may not do a ton of systems integration. To create a better fit, you may have to cut some roles or re-arrange the way you work. Chances are you will keep on some staff, at least while you get acclimated to new markets.
Assimilation mergers are there to bring the new company into the fold. Assimilation can cause a lot of uproar and anxiety because it usually involves getting rid of redundant roles, benefits, etc. HR needs to manage these mergers, so the new company doesn't feel like it's being taken over abruptly. How can you bring both companies together while keeping the primary company's core values intact?
Add-on mergers don't make a big deal of connecting companies. These deals happen very quickly, but it can be a challenging merger, especially if you aren't sure about the long-term goals of it. You want to make sure that the business is different enough from your own, so you don't waste money on redundancies.
What is HR’s Role in all of This?
Now that we understand the types of mergers and acquisitions your teams might be handling, let’s discuss the role HR plays in all of this. Here are a few ways that your human resources team can help create a successful merger.
Doing Due Diligence Leading up to a Merger or Acquisition
Mergers and acquisitions can be tricky subjects. We’ve recently seen the company Helios & Matheson Analytics go defunct after the purchase of MoviePass went awry. Companies execute mergers and acquisitions all the time, and it's alarming how one bad deal can turn an entire company upside down. If you are within HR at a company considering a merger, you need to research the company and understand the risks involved. Every merger has risks, but some companies take on these risks unnecessarily. Before Helios & Matheson Analytics purchased MoviePass, there were already signs that their business model was unsustainable. Are you digging into the data to understand the reality of what this merger or acquisition looks like when it's complete?
Reconciling the Various Parts of the Businesses
When you merge two businesses, there will be a lot of overlap. Sometimes these systems need to stay separated, but often it would make more sense to cut out the unnecessary expenses and consolidate positions, benefits, locations, etc. Some mergers need extra infrastructure. For example, if you are purchasing a business to expand your business footprint, you likely don't want to downsize everything. Consider your intentions when you make a plan of what to get rid of and what to keep.
Reducing Friction Among Employees
Honesty is the best policy when your employees are dealing with an acquisition. Emotions will run high when a merger or acquisition is on the table. How can you step in and help people understand the changes that will be made? The worst thing you can do is hide the challenges your employees might face during the merger.
Testing and Using New Strategies & Ideas
Last but not least, you need to be okay with testing and using new strategies as your company transitions. There is so much going on, and your old ways might not work anymore. The company you are acquiring might have a better benefits plan or way of doing things. Instead of trying to force the new company to subscribe to your ideas, consider how their strategies might be just as effective. Sit down with the leadership team of the company you are acquiring. What do they currently do? What can you learn from them as you are building your business?
Keep Management Up-to-date on Issues
Your strategies for fusing the companies can only go so far. Eventually, you need to keep company executives up to date on issues that arise. Make regular check-ins with executives a part of your routine as you are going through the acquisition process.
Handling a merger or acquisition is tough for both businesses. Whether you are acquiring another company or being acquired, you need to be there for your employees. As the human resources team, you are on the front line. You hear everyone's complaints, and you can help the entire merger process go more smoothly.