Partner Article

HR could be the difference between success and failure

It is widely accepted that the majority of Mergers and Acquisitions (M&As) fail to deliver on their strategic promise and enhance shareholder value.

Historically, this figure has been as high as circa 80 percent. My colleague Robin Murray Brown has written on the subject of M&As for a number of business publications, and I’m pleased to see that his comments and opinions have been corroborated in a recent report published by the Cass Business School.

In particular, Robin has made frequent reference to the importance of including human resources personnel early in the process to assess the challenges concerning integration.

Successful Dealmaking, a report based on two studies produced by the M&A Research Centre (MARC) at Cass Business School provides valuable insights on what distinguishes successful deals from failures, covering all stages of the M&A process.

Findings covered in the report demonstrate that HR issues are possibly the most important factor determining the success or otherwise of the deal. Companies with a greater focus on HR – measured by the existence and use of a HR committee at board level – are more successful.

Additionally, those companies that quickly align the management teams – particularly at the operational level – and complete the majority of redundancies within the first twelve months post-acquisition, are also more successful. At Tyzack, I see this occurring more frequently in the private equity backed community than I do in the corporate world.

With the UK economy growing by almost 2 percent in 2013, the strongest rate since 2007, we expect to see an increase in the number of M&As as companies seek growth opportunities in an increasingly globalised marketplace.

However, private equity investors and the senior executives and board members of acquiring companies need to improve their M&A processes if they are to raise the level of success.

This was posted in Bdaily's Members' News section by Tyzack Partners .