Mergers & Acquisitions 101

17 September 2013, Singapore: Today, I was reminded about Mergers & Acquisitions (M&A). It prompted me to write a short article.

Over my 19 years of HR career, I notice that not every HR professional had the opportunity to be involved in a pre-M&A projects. In my early days, when my company was in the process of begin disposed (sold off) ... in one of the due diligent session the "controlling" company Group HR Manager came over to me and asked for our corporate HR handbook and cited she need to have it as part of the due diligent process. I seek the approval of my corporate HR and the request was turn-down. I hope if you are involved in a due diligent process ... you don't make such mistake as there are other ways to go about it. In most M&A project, they will use the 100 days time frame as their target to complete a successful integration.

Listed below are some of my personal note ...

The Merger & Acquisition phases can best be described using the “marriage” analogy. The M&A phase comprised of 3 stages: 

Phase 1: The Dating

Usually happen 100 days before the official Merger & Acquisition. At this phase, you need to ask the following questions:

1. What is the reason (s) for the Acquisition?

• Customer
• Technology
• Market
• Enter new Country
• Others

2. What are you getting into? Check the following …

• Balance sheet
• Existing business contract
• Employees
• Customer 

3. Define what is the success factors for the acquisition to be successful? 

In addition, you need to know "What is the objective of Due Diligent?" It’s main objective is to find risk (s) or exposure (s). It is not about negotiating the price of the acquisition or gaining access into their HR employment benefits.

“At this phase, it will determine whether you make or break … [the acquisition]” ... by Ram Gupta, Executive Vice President of Peoplesoft Products and Technology

Phase 2: The Mating

This phase usually start on the 1st day of the official M&A announcement and duration is usually for 100 days.

At this phase, the 3 success factors are …

1. Execution
2. Execution
3. Execution

The “Controlling Party” need to create “Road Map” for the newly created organization for the next 3 years …

1. Products
2. Partner / Supplier
3. Business

Once you have finalized the “Road Map” – you to …

1. Communicate
2. Communicate
3. Communicate

According to researcher … the sequence of  communication should be to the …..

1. Employees
2. Customers
3. Investors

“…happy employees will lead to happy customer and happy customer will lead to happy investors…”  Ram Gupta

During the ‘Road Map” communication session, be prepared for …..

1. Misunderstanding;
2. Miscommunication.

Ensure that there are proper follow-up on the announced “Road Map”. Weekly up-date on the progress is recommended.

At this phase, you also need to focus on retaining employees. By … 

1. compensating and rewarding people.
2. ensure job satisfactions.
3. improve communication.

Phase 3: Creating Value

At this phase, usually happen after the first 100 days of acquisition …..

• Identify the strengths of both organization and it’s people (before and after the M&A).
• What is the new opportunity (employees, customer & shareholder)?