June 30 fast approaches, and with rallying financial markets and vaccine rollout, financial analysts anticipate that Mergers and Acquisitions (M&As) will continue their upward trajectory for the next financial year and beyond.
With M&A continued growth projected, we bring you a 3-part series with tips and advice on the challenges and opportunities for organisations who are about to embark, have embarked or who have merged and are wondering, “what now?”. Change2020 has comprehensive experience in providing support and expertise in transitioning businesses and employees through the M&A process.
In our first M&A discussion, we focus on an issue that often presents many challenges, and it is all about the organisation’s most important asset, its people. With M&As, the human factor plays a huge role and organisations need to plan for this area. They need to consider how they will navigate through employment contracts, negotiate and manage union representatives and make sure there are no potential breaches of labour laws or exposures to industrial risk and merge the two cultures to create a sustainable organisation moving forward.
A leading HBR article in this space, The Big Idea: The New M&A Playbook states, “study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%”. KPMG research also shows that only a third of mergers, acquisitions and takeovers add value. In fact, 70% “reduce shareholder worth or, at best, are neutral”.
So, these are worrisome stats, and beg the question why do things so often go wrong?
KPMG proposes that an inadequate focus on value creation and “a gaping inability to keep key personnel and get the two corporate cultures to work in unison” are the cause of many M&A failures. They also state that during the process, it’s easy to treat a prospective transaction as a purely mechanical and scientific process. Often the critical people aspect of an M&A, which is rarely straightforward, gets overlooked as a key issue. 
We recognise that when dealing with complex industrial and human relations surrounding mergers and acquisitions, organisations need to be aware of specific issues and have access to specialist knowledge of the industrial relations space. Our M&A industrial and workplace relations expert, Brad Bevan, in conjunction with the M&A advisory team work closely with clients to anticipate and manage potential issues. Brad also has extensive experience dealing with C-suite and board level industrial relations issues. He has a special knack of solving difficult industrial negotiations and avoiding things escalating to litigation.
Once these negotiations are complete, Change2020 continues to support organisations through the transition phase with advice on immediate practical needs, such as operational and workforce planning strategies, fostering stronger communication and employee engagement to sustain positive M&A outcomes achieved.
Parts 2 and 3 of this M&A series will look at other people issues relating to due diligence, compliance with post-deal clauses, intellectual property, key personnel and integrating the acquisition into existing business structures and culture.
We encourage you to consider these articles, as they examine the significant challenges that organisations can face on the M&A journey. What’s more, these issues can potentially become future major challenges unless they are effectively addressed right now in the present.