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HR the hero: How human resources can help create value in deals

In the quest to get more value out of an acquisition, the successful integration of organizational cultures can be a deciding factor. But pulling that off is easier said than done. In one PwC M&A study, nearly two-thirds of executives told us cultural issues hampered value creation in their last deal.

Culture — an organization’s shared beliefs and values — can be deeply influential, shaping everything from how work gets done to how engaged employees feel. Yet culture and other workforce-related issues often get overlooked in deals. In our 2020 M&A Integration Survey, only half of the respondents said culture was part of their change management plan.

How can you keep those issues from draining deal value? That’s where your human resources (HR) team has an opportunity to be a hero in helping get the most value out of a transaction. By taking the lead on or being a key facilitator of cultural integration, HR can get ahead of the employee-related challenges that often pop up during M&A.

Catch workforce problems before they become an integration problem

From management styles to preferred modes of employee collaboration, cultural issues require the same attention in due diligence and integration planning as any other aspect of a deal. Involving HR in the earliest stages of the deal to analyze the acquisition through a people lens can help identify potential problem areas.

Our integration survey found that many companies track deal performance indicators such as cost savings and operational efficiency, but less than a third of respondents consider employee engagement when evaluating deal performance. Employee engagement indicates how committed employees are to the organization and how passionately they feel about their jobs. Low numbers can signal that people are ready to jump ship. An HR leader would likely make sure that metric was included when evaluating deal performance and flag the issue of low engagement as something to be considered and corrected.

Even if there are no red flags, having HR at the table early in the process can help enable a smoother transition. For instance, HR can help identify issues with employee sentiment that could bubble up once workforces combine, giving leaders a chance to get ahead of potential problems. 

Keep talent from leaving

Another area where HR can help add value in the deals process involves employee retention. You clearly don’t want coveted employees of the target company to walk before the deal closes, and HR can help you identify flight risks early on and intervene. Your HR team can develop retraining and upskilling opportunities for employees so top talent can continue to grow. It also can establish a talent acquisition strategy to address gaps in employee skills and attract appropriate talent to achieve the integration and future state imperatives.

Having the right HR tools and technology also can help with the transition. Investing in data analytics, for example, can help HR adjust performance reviews, compensation packages and recruitment strategies ahead of closing.

Most of all, HR can be an important facilitator for employees who want to ask questions and voice concerns throughout the integration. HR leaders can create feedback channels, conduct pulse surveys and hold forums so employees feel they’re being heard and leaders can adjust policies and procedures as needed.

In the end, people play a big part in M&A success. Involving HR at every stage of the process, beyond just the standard HR functional areas, can go a long way toward limiting disruption, increasing employee engagement and ultimately creating deal value.

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Colin Wittmer

Colin Wittmer

Deals Leader, PwC US

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