Post M & A process

India Inc has been grabbing headlines for quite sometimes now because of the highly talked about mergers and acquisitions taking place in the market. From the ever famous Mittal-Arcelor deal to the Jet-Sahara, and other mergers and acquisition Indian companies are destined to take brand India to newer heights. Companies look for various strategies to maximize the potential of their performance and in turn, increase profitability. They undertake restructuring measures to come out of stagnation and improve performance, one amongst these steps has been the M&A route. But any M&A isn’t an easy task for the companies and the employees involved. But if addressed with utmost planning and are, it can also be a smooth ride.

The process by which a company is bought or sold can sometimes prove to be time consuming and expensive. Typically a transaction takes six to nine months and involves many steps. This transition period is very crucial and the HR team in tandem with the communications department needs to have the communications flowing so that the most important question how does it affect me? is answered. The most difficult challenges are the retention of key people (which are not necessarily people at the top) communicating that the move would increase value of the organization and also addressing the cultural issues. Companies that don’t address these issues may suffer a loss of profitability, top talent and confidence in leadership decisions.

Essentially acquisition strategy is around creation of value for stakeholders. In assessment of a merger or acquisition a number of factors must be considered around long term strategic value.

Integration is the biggest challenge in any M&A. the importance of a change management program with thorough communication is essential for the success of integration. A new name, a new logo or a new brand matter very little at the grassroots level. The employees want to understand the extent of change and its impact on them.

It had been observed that many a times, M&A fail to become a success. Though the reasons can be varied, there are too many intricacies involved and not every organization can tackle it efficiently. So, what are the factors that would determine whether a certain M&A is a success or failure? While acquiring sometimes it is decided to retain the name if it commands immense respect in the industry. Then the positions if they strengthening the business and the people holding them have to be retained. But are they at the same time acknowledging long term employees also, is a vital question. While taking over, it may be necessary to allow the acquired business to be run independently within the framework of group’s ideology. Key people are taken into confidence and allocated roles that suited their interest without compromising on growth and values. The idea is to have a core set of shred values amongst the group. Beyond that, each team has the working freedom to operate and grow as they please. It is to be ensures all employees are treated with respect and provided a challenging work environment. If employees are a young band of people with an average age of say below 30, the acquiring company has to manage to mould employee mindsets and evolve a composite culture.

HR is an intrinsic part of the integration team in an M&A because of the ability to evaluate the compatibility of corporate cultures and difference position for combining enterprises. HR must also be the trusted source of information for employees about what the M&A means for them. The key HR initiative of Vertex (acquiring company) during the M&A was a carefully designed and implemented integration plans, with the HR elements at the heart of it. A transparent and honest policy with all employees will yield better results. All change-management expertise is called upon to address employees’ anxieties about the acquisition and the employees were updated in real time on all the developments.

HR plays two roles—one is at the due diligence stage i.e. before an M&A is formalized assessing cultural fit and synergies as well as understanding how effective the integration might be based on leadership ability of the target policies, processes etc. The HR team also looks at alignment of compensation and benefit plans, organizational structure, decision making etc, all critical to most M&A finalization. Post M&A, HR plays the critical role of bringing the organization together ensuring that two entities mesh as one through the championing of the entire change management intervention. At Earth Water Group they organized regular employee engagements activities by making them feel as a part of a bigger organizations with strong employee centric values during their M&A. They have a very transparent working system and a monthly open forum which allows all employees to share their opinions. There is a conscious effort to engage, involve ad share.

Though M&As are extremely hyped these days, not all of them became successes. And those who do reach that point are true manifestations of a lot of thought, effort and planning put together by the two organizations and their employees as well.