[Kristina K]

Reflecting on some of the M&A Training material I gained the impression that it is not per se a given to have a HR professional at the table during the entire M&A process, from beginning to end.

What have you done, or witnessed that has taken place, to establish HR as a permanent representative at the M&A table and be part of the conversation during the entire M&A process?

Or if you have been part of M&A discussions and there was no representative of HR, could you elaborate on why that was?

[Tack Kitanaka]

Hi Kristina, from my experience, I have seen both the engagement of HR or non-engagement thereof during both the M&A due diligence and PMI process. For due diligence stage, it often times involves small group of team members and HR matters are usually covered by legal team, if HR people are seen to be working more on operational side. So I would think that the first key to involve HR early in the due diligence phase is to create the perception and expectation (and also for HR to act as such) of HR undertaking more than the operational matters in their hand. But in order to do that, HR would need to be staffed that way, plus the mentality of HR needs to be able to undertake such tasks. For PMI phase, it just makes sense to have HR onboard the employees as much of it involve operational matters as well (though certainly not limited to that). I would start with HR taking on the operational items first to get HR involved in the process, then placing HR to more wider PMI tasks (such as retention strategy, cultural integration, etc.). Same here, oftentimes I see that what prevents HR from taking on all these tasks is the understaffing and lack of mindset to take on these somewhat cross-functional roles that could be seen as focusing on small niche of certain business unit (and not a company wide matter that HR usually are keen to work on).

[Kirill]

Kristina,
I also noticed that HR is a crucial part of an M&A deal, but unfortunately, it’s not always standard practice. The one side is that decision-makers may not fully appreciate the strategic role that HR plays in integrating organizations and managing cultural issues, leading to HR being sidelined from the M&A proceess. The other side is that HR departments are too focused on day-to-day operations and do not want to participate in the M&A deal until it’s finished.

[Ed]

HR is a critical element to successful integration, and we include local HR representation in the process starting with the LOI and DD, or sooner if there are extenuating circumstances. Earnouts, Employment Agreements, and Retention Bonuses rank among the top topics for HR inclusion. One of the biggest challenge we see is the step change of joining a large multi-national corp regarding random drug testing, DOT and HAZMAT compliance, training record retention, etc… All material in a successful integration and business continuity.

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