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Role of Human Resources

in Merger & Acquisition
Published on March 27, 2014

Suresh Amara
HR Thought Leader | HR Tech Evangelist | HR 75 articles Follow
Transformation | Executive Coach

Introduction: While there are many definitions for merger, acquisition

and de-merger, let me put it in a simple manner. Merger and
acquisitions are often made as part of a company’s growth strategy.

Merger: Merger refers to combining of two companies where one new

company will continue to exist. Merger is combining of two or more
companies, generally by offering the stockholders of one company
securities in the acquiring company in exchange for the surrender of
their stock. It can also be defined as an arrangement whereby the assets
of two or more companies become vested in or under the control of one
company.

Acquisition: Acquisition refers to buying of assets of one company

from another company. A action in which a company buys most, if not
all, of the target company's ownership stakes in order to assume control
of the target firm. Acquisition is purchase by one company of
controlling interest in the share capital of an existing company.

Reasons for Mergers & Acquisition: Every merger and acquisition

has its own unique reasons based on the organization goals. Here is a
few of them:
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Acquisition of technology, assets or talent

Increasing capabilities & sharing expertise

Increased market share

Diversification of products and services

Stages of Merger & Acquisition:

1.Pre-merger & acquisition: Based on growth strategy, the acquirer

searches for an appropriate partner to assess potential targets and
develops a plan for execution.

2.Due diligence: Due diligence refers to the investigation made by a

buyer to gather all relevant facts and information that can influence
decision to enter into a transaction or not. The acquirer does thorough
research of the credentials of the company, its market valuation, status
of accounts receivables & payables etc.

3.Integration: The acquirer creates a comprehensive plan for

integrating the two companies. This happens either at the time of or
completion of due diligence.

4.Post-merger & acquisition: This is the final stage and most crucial
part of a merger & acquisition. It can take months or sometimes even
years based on the organization size, geographical locations and the
complexity in the agreement.

HR Role in Merger & Acquisition: Success of merger and

acquisitions depends on the people who drive the business, their ability
to drive, lead, and formulate strategy, execution and implementation. It
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is very important to involve HR professionals in merger & acquisition
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as it involves people and has an impact on key people issues. HR
professionals play an active role in the change process by offering their
interventions to help ensure a successful merger and acquisition.

HR plays a vital role in

Employees coping up with change and culture

Organizational hierarchy structure,

Maintaining the productivity by placing of right people at right

place

Alignment of compensation, benefits and welfare schemes

Job security

Relocation

Compliance of local labour laws

Employee communication

Taking care of personal records

Best practices to be followed by HR during and after merger &

acquisition:

Identify leaders from both the companies for effective

implementation, transition and communication of the same to
employees.

Train managers on the nature of change

Explain new roles to the people

 Orientation programs on policies and procedures 2 2

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Orientation programs on performance management, compensation,

benefits and welfare schemes

Identify the skills of people and mapping them appropriately

Town halls & Team building activities

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HR Thought Leader | HR Tech Evangelist | HR Transformation | Executive Coach
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Dikshit Giri • 3rd+ 5mo

Human Resources Management| HR Operations | Industrial Relations| Employee
Relations| Public Relations || UPL LTD || SRF LTD. || EMAMI LTD || MLW | LLB | PGDHRM

When role of HR is important as a strategic partner, HR has to study out the

Post merger following aspects as also tobe taken care for due diligence
1. Nature of business of both companies.
2. Compititive challenges
3. Internal and external risk assessment …see more

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Schneider Fernandes • 3rd+ 3y

HR Enthusiast! Helping organizations succeed in the market :)
 there would be a lot of layoffs in a typical M&A situation owing to excess 2 2
manpower resources. Retaining the right talent and also ensuring smooth
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transition is important. Streamlining the HR systems and processes is the major
area of work for HR as it directly impacts the employee experience. Apart from this,
…see more
the other critical areas where HR needs to focus are : Organizational design and

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HR Thought Leader | HR Tech Evangelist | HR Transformation | Executive Coach

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