September 21, 2016

What ‘people risks’ mean for a business merger

Managing human resources can be an important part of adapting to mergers.

Mergers bring both technology and personnel-related risks to light. Back in March, Mercer announced a report specifically looking at the latter, what it called "people risks." These are the more human elements of any merger, things that could dictate how well two companies mesh together, based on the behavior of the people who work for each.

Though any company in a merger should consider the impact on people involved, the source said that risks will differ for buyers and sellers. Buyers should be concerned with communicating clearly and having an effective HR system in place for facilitating transitions. While a merger takes place, employees need to know that their benefits are taken care of.

From the seller's perspective, the merger can require a Transition Services Agreement, as well as clear plans for talent management and retention. Mercer also said that a third of claims sellers provide less information about their assets for sale than they have previously. 

Global M&A Transaction Services Leader Jeff Cox said that the key for both members in a merger is harnessing data. 

"Both buyers and sellers tell us they need rich data, unique insights and practical guidance to maximize transaction value and reduce people-related risks," Cox said. "The goal of our research is to enable business leaders, inside and outside of the HR function, to make more informed people decisions in the current challenging global deal environment."

People risks aren't insignificant, and they can directly shape the way the merger develops. Companies need to consider whether or not they will lose personnel during an acquisition and if the deal comes with any major executive losses, among other things. Factoring these into the acquisition strategy can be a preemptive way to guide the process.