HR Challenges during Merger or Acquisition (M&A)

This topic contains 6 replies, has 7 voices, and was last updated by  Ahmed Zainalabedin 7 hours ago.

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    Majed Faraj

    What are the most challenges HR may face during the Merger or Acquisition (M&A)?



    Losing key employees from the target company.


    Terrific question @najranmt! I am guessing that you are asking what are the most common challenges, so please correct me if I am incorrect.

    The root of the most common challenges is Human Capital Due Diligence. This includes talent assessment, identification of key personnel to retain, evaluation of human capital programs (total rewards [benefits & compensation], performance management, retention, engagement, and L&D), and development of communication and retention strategies through the M&A engagement. While direct costs are always a key focus of the financiers throughout the engagement, not enough attention is paid to the long-term impact of the human capital components, some of which may cost a bit more upfront but pay significant dividends in the 1-3 year period post transaction close.

    @qahtfa00 is correct, that one of the most common challenges is “losing key employees from the target company”. The loss of key talent is often accompanied by the loss of intellectual property and institutional knowledge that was not appropriately transferred. With the appropriate talent assessment, identification of key employees, evaluation of human capital programs with a critical eye on those that best advance the transaction thesis and merged entities strategic plan, and carefully crafted communication and retention plans all performed and developed during the Human Capital Due Diligence phase, you will significantly increase the success of the transaction in the critical 1-3 year window post close.


    Elizabeth Perlak

    Great question – I think one of the key challenges for HR during M&A is getting a seat at that table when strategy is discussed. For HR gathering the right information to proceed at an appropriate speed is key to success. The organization needs to be clear about the motivations behind the M&A and then HR has a key role to play in seeing them fulfilled. By including HR in the business strategy, HR can then move with the speed and precision necessary to support the goals. If there is consolidation or redundancies, HR will need to focus on evaluating job roles and responsibilities and performance of individuals. If there is a need to retain key people, HR will need to gather information about company culture and employee engagement and continue to preserve the elements that attracted those individuals in the first place.



    One of the key challenges is definitely keeping valuable employees, and keeping the morale of working level staff high.


    Charles Ladas

    One challenge for HR during the M&A process is getting all employees on the same page with regard to company policies and procedures. Another challenge is getting target employees up to speed with the acquirer’s business strategy and processes if the target is being absorbed into the acquirer. A good amount of employee training generally needs to take place.


    Ahmed Zainalabedin

    I believe one of the most challenges related to HR is to integrate HR policy between the buyer and the acquired company in a way that does not adversely impact the employees of the acquired company.

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