 Making Mergers Work
The Strategic Importance of People
New Softcover Edition Now Available!
Read the Reviews:
Financial Executive | Benefits & Compensation International | Soundview
This highly acclaimed book, based on a research study of more than 450 HR executives plus the expertise of Towers Perrin consultants, provides an easy-to-understand road map showing how HR can add value at every step of the M&A process. The book demonstrates that people are the key to making a merger work, and that people-related problems-such as culture clashes, management disputes, loss of talent and the inability to manage change-are the basic reasons why mergers fail.
Order the Book
From Financial Executive magazine, January/February 2002
Making Mergers Work opens with a series of charts and tables drawn from research by well-known research and consulting firm Towers Perrin, where the editor, Jeffrey Schmidt, is a managing director. As the charts quickly make clear, there are major differences between successful and unsuccessful mergers -- and similar differences in attitudes, synergies and the ability to overcome obstacles between companies that succeeded and those who didn't.
In a series of chapters penned by different writers, the book explores traditional and "new" perspectives on M&A, including such core disciplines as due diligence, integration planning and implementation. But a fundamental tenet throughout is the notion that people are the key to making a merger work, and that people-related problems-such as culture clashes, management disputes, loss of talent and the inability to manage change-are the basic reasons why mergers fail.
Making Mergers Work has the look and heft of a textbook, with a plethora of charts, tables and bullet points sprinkled throughout. It's far more of a resource than a book to be read straight through, but that's a large part of its effectiveness. It's not a breezy, shallow consultant write-through; instead, it's meaty, deep and probing, which makes it a valuable addition to the merger literature.
Financial Executive magazine is the flagship publication of Financial Executives International, which provides senior financial executives with financial, business and management strategies to help shape corporate financial management practices and decision-making.
From "Benefits & Compensation International", Sept. 2002; Volume 32, Number 2
Making Mergers Work
The Strategic Importance of People
Schmidt notes that strategic people management is as crucial to a successful merger or acquisition as a sound strategy or fair valuation. According to the survey participants, the top seven obstacles to achieving success with a merger or acquisition are:
- An inability to sustain financial performance
- Loss of productivity
- Incompatible cultures
- Loss of key talent
- A clash of management styles/egos
- An inability to manage/implement change
- Objectives/synergies not being well understood
All these obstacles are either directly or indirectly related to the strategic management of people and Schmidt believes that, of these, cultural differences between companies may be the single highest barrier to success. HR professionals usually have little involvement at the pre-deal stage, which goes a long way to explaining why people, organization and culture issues tend to get overlooked, the usual members of the deal team not being trained to identify or assess such issues.
… According to the book, there are marvelous opportunities for HR, which can assume a new role as business partner in the emerging company, speaking the language of the business. However, to become fully fledged business advisers, HR professionals must know more about the M&A process overall and understand how to capitalize on a deal's expected value by identifying and managing key people issues. Once they have this under their belts, the idea is that HR professionals could contribute on equal terms with their counterparts in finance, operations, legal and other functions at the early strategic stages of the M&A process. Reading this book would make a good start.
From Soundview; week of September 9, 2002:
Making Mergers Work
The Strategic Importance of People
In the introduction to Making Mergers Work, Louis Forbringer, a former president of the SHRM Foundation, writes, "More than three-quarters of all mergers and acquisitions (M&A's) don't live up to expectations."
To help human resources (HR) managers reduce the risks that are inherent in a merger or acquisition, this book gives them the tools necessary for creating careful planning and implementation, realistic expectations, and consistent, well-conceived communication with employees. By gathering together the expertise of authors who understand the intricacies of HR management, Schmidt has compiled a book that can help leaders understand and appreciate the importance of HR in any merger or acquisition.
Schmidt writes that, when exploring the success of M&A's, "study after study concludes that even well-conceived deals often fall short of their promised benefits." This is frequently because of people or related issues, he explains. Making Mergers Work offers new insights into understanding and successfully managing the people challenges of M&A's, and gives HR professionals the ideas, information and practical tools for playing a strategic role at every stage of the M&A process.
Four Stages of the M&A Life Cycle
The book follows the M&A life cycle through its four stages, focusing on the crucial people issues that arise at each stage. The four stages are:
- The Pre-Deal Stage: In this stage, acquirers search for compatible targets or merger partners. Typically, this involves developing a growth strategy that defines the role of M&As; setting criteria for candidates screening, evaluation and selection; identifying and assessing potential candidates; deciding which candidate offers the best fit for a deal; and developing an action plan for executing the deal. HR is least involved in this stage.
- Due Diligence: After an offer to merge or acquire has been made, companies must ensure that the proposed deal is sound from strategic, economic and implementation perspectives. This is the time to discover whether a proposed acquisition meets the needs or standards of the acquirer. At this stage, HR professionals should help negotiators understand the potential impact of people, organizational and cultural issues to enhance the deal's chances for success.
- Integration Planning: During this stage, successful acquirers or merger partners create a comprehensive plan for all aspects of integrating their businesses and organizations. This stage begins when both sides are reasonably confident that the deal will go through. HR should help to ensure that people, organizational and cultural issues are found, evaluated and resolved in a timely and expert manner.
- Implementation: The final stage of the M&A life cycle builds on the planning that has gone before. Maintaining business continuity and momentum during this stage is the single most important factor in the ultimate success of an M&A. Employees will influence the success of this stage, and HR's actions will influence employee attitudes and behavior.
Recognize Impacts and Respond Appropriately
To be able to offer useful advice, HR professionals must learn more about the M&A process and how to capture a deal's expected value by identifying and managing the people issues involved. By knowing more, HR managers have more of a chance to join their counterparts in finance, operations, legal and other functions while the early stages of the M&A process develop. When HR can prove its value in the M&A process, it can participate more fully in key decision-making and management activities in the process.
A merger or an acquisition has a profound affect on the people of both companies, and managing this impact is an important part of managing a successful transition to a unified leadership, business model, and organization. By recognizing and responding appropriately to the impact of the deal on each employee, HR managers can set the tone for long-term success or failure of the new company.
Why We Like This Book
Successful mergers and acquisitions depend on the effective management of people issues. Making Mergers Work, copublished by SHRM and HR consultancy Towers Perrin, shows senior leaders how HR managers must play a larger role in the success of M&A deals. This important and timely book also presents the results of a Towers Perrin worldwide survey of more than 400 HR executives on the HR challenges that companies face during the M&A process.
Order Making Mergers Work
|
