HOW TO ADDRESS THE RISKS TYPICALLY ASSOCIATED TO M&A ​

Statistics seem to infer that the majority of M&A initiatives fail to deliver the planned strategic and financial benefits to shareholders. Research indicates that the ‘people’ aspects of M&A activity are the main factors which determine whether an initiative succeeds or fails.
There are principally two factors that influence an organisation’s ability to deal with the ‘people’ aspects of M&A activity:

• Capability to understand, align and manage the intangible ‘people’ aspects (change management) to the tangible strategic / financial aspects (project management).
• Timing and involvement of change management expertise, either internal HR or external resources.

​Capability
Where change management elements of the M&A activity are considered, it is vital that the balance between intangible and tangible aspects are maintained. Recognising and effectively managing employee engagement, dealing with concerns through effective communications and helping people to understand the changes, are all paramount to minimising speculation, reducing anxieties, generating positive engagement and retaining talent during the M&A process.

​Timing and involvement
Recognising the 6 stages of M&A activity:
1. Target evaluation
2. Due diligence
3. Structuring deal terms
4. Integration planning
5. Integration implementation
6. Post-integration development
Those organisations considered to be successful in M&A activities tend to involve their change management expertise right from the start, in the target evaluation stage. The less successful activities tend not to involve their change management expertise until the integration planning stage.

Correct identification and analysis of the tangible risks and benefits during due diligence, including factors such as pension, benefits and severance costs etc. is an absolute requirement. However, intangible factors such as key skills retention, cultural compatibility as well as employee communications and relations are just as likely to result in reduced benefits from the deal during the integration or post-integration development stages if they are overlooked or under-estimated.
Duxinaroe are ideally positioned to introduce leaders who are currently engaged in or facing imminent M&A initiatives to a robust method, which, when applied thoroughly, ensures many of the issues typically associated to poor M&A outcomes are avoided from inception.
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