The M&A market is showing signs of recovery in the second half of 2020. Companies are reinventing their business strategies through opportunistic acquisitions or divestitures. But as they pursue reinvention, organizations need to consider people risks — especially in a post-pandemic world. 

In an environment of uncertainty, carefully assessing financial risks and liabilities from a people perspective is critical. A comprehensive analysis, starting with HR due diligence, can help you navigate complexity, conduct better-informed negotiations and achieve long-term deal success. In addition to forming a robust integration plan, establishing a Project Management Office is crucial to successfully executing and accelerating deal value. At every stage of an M&A transaction, you should consider the people implications. Why? Because achieving your business goals ultimately depends on your people. Engaged talent helps ensure a deal’s success, so you should make sure you have a holistic retention plan in place.

 

Culture is also critical in maximizing the value of the deal for the combined organization. Our research shows that 85% of companies cite failure to address culture issues as a significant barrier in failed M&A transactions. Having the right corporate culture helps align the operating environment and employee behaviors to the deal objectives and future business strategy. It’s essential to address questions like:

 

  •  What are the key drivers of deal success?
  • Who do we need to help us achieve the goals of the combined organization?
  •  What culture metrics should we use to measure the success of post-deal integration?

In addition to focusing on corporate culture, embedding ESG and sustainability in the people side of deal planning can create value for employees and multiple stakeholders in the combined organization, potentially boosting ESG performance and enabling sustainable business growth.

 

This focus on sustainability is also guiding how organizations choose to invest. More than one-quarter of assets under management globally are being invested based on the premise that environmental, social and governance (ESG) factors can materially affect a company’s performance and market value.  The trend of sustainable finance in real estate and infrastructure investment is gaining momentum, increasing the uptake of ESG reporting and benchmarking. During the investment decision-making process, investors are also using "negative screening" (an approach used by responsible investors to avoid investments that they do not want their money associated with).

 

The market’s focus on sustainable finance is a direct response to climate change concerns, enhanced relevant legislation and increased awareness of the impact of investments on the environment and communities. As uncertainties in the world become a daily reality, it is more important than ever to adopt an approach that allows us to fully consider our physical assets’ environmental and social resiliency and identify resilience opportunities that can help secure long-term economic investment returns.

Find out more from the whitepaper:

Stranded on a large ice fin, a man stands on top looking at the lake surrounding him.

Building resilience in investment decisions

  • Resilience against climate change risks
  • Sizing and capturing resilient opportunities
  • Optioneering methodology and the Bankable Resilience Tool (BaRT)
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Understanding people risks and issues during post-pandemic M&A transactions 

  • HR due diligence
  • HR integration planning
  • People retention

Maximizing synergy through human capital

  • Cultivating the right culture
  • Embedding sustainability in human capital

Authors

Darryl Parrant
Career Business Leader Mercer Hong Kong
Haze Zhang
M&A Advisory Services Leader Mercer Hong Kong
Alex Katsanos
Head of Business Advisory Arcadis Hong Kong & Macau
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