M+A Testing

Mergers & Acquisitions: Human Due Diligence:

Up to 80% of mergers and acquisitions fail.* That’s simply stunning, but why does it happen? There are many reasons M&A failure is more the norm vs. post-merger success.

When people think of mergers or acquisitions, the first thing that comes to mind is due diligence:  acquisition of varying amounts of operational, financial and consumer data to better understand the inner workings of the company being acquired and synergies of both organizations.   The whole process can take weeks or even months of in-depth analysis, but too often, one of the most critical aspects is largely ignored: the human element.

Traditionally after the merger, turnover begins not only among management ranks, but with critical key performers that helped to make the company an attractive acquisition target in the first place. While integration strategies are being discussed in the executive suite, uncertainty, stress and fear cause chaos within the rest of the company. New operational tactics, policies and procedures are being rolled out, while employees are dealing with new supervisors with unknown expectations. Fear of being fired paralyzes a significant portion of the company and productivity, quality and morale plummet. “It’s estimated that almost two-thirds of companies lose market share in the first quarter after a merger. By the third quarter, the figure is 90%.**

While a few of these outcomes are inevitable solely due to the fact that there has been significant organization change, including human due diligence into the overall analysis of the company can minimize the negative impact that occurs without it.

Predictive Assessments can help you understand the critical human element of the company being acquired: the culture, employee skills (both utilized and unknown) and gaps, communication style and very importantly, leadership skills and capabilities. We can help you identify key performers at every level of the organization, managers and leadership that must be retained to operate and run the combined business.

Predictive Assessment’s testing instruments can help you determine how well the target company’s culture and key personnel will mesh with the acquiring organization, who should be retained, how to develop an internal communication strategy and how to begin the integration of the new company.

Talk with us and let us partner with you avoid the myriad of costly issues when human due diligence is ignored.

* (inc,com, Margaret Hefferman, 6/14)

**(HBR.org, 5/16, A Lewis)