m&a consulting - aon hewitt
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Mergers & AcquisitionsEffective HR support to the deal team in a merger or acquisition can make the crucial difference between the success and failure of the deal
Our research consistently shows that failure to prioritise the people issues in a deal is a major reason for failure to achieve the revenue and cost synergies that were the business case for the deal itself. The most successful acquirers understand that involving HR early in the deal can lead to proper recognition of potential financial and non-financial liabilities, and provide crucial input into post-merger cultural and structural integration planning.
HR has a role to play right through the transaction process, from early target identification through to delivering business synergies.
The human capital risk of a transaction can range from unfunded benefit liabilities to over-generous change of control payments, through cultural mismatch and key talent defection. Human capital opportunities may include reduced benefit premiums, a stronger talent pool and enhanced career choices for your high-potential employees.
The expertise to identify and quantify risks and opportunities, and to develop a hundred-day plan to ensure a smooth take-on is becoming an essential skill for HR teams. Aon Hewitt has a team of specialised HR consultants who are working with many of the UK’s leading companies to ensure success in their corporate transactions.
The Aon Hewitt approach Our M&A team are experienced HR consultants with broad experience of the human capital issues arising during deals, including: organisation, culture, leadership, reward, pensions and terms and conditions. We may be called in initially to support the due diligence phase, identifying and quantifying potential risks, suggesting mitigation strategies and advising on pricing and the sale agreement.
We carry out both private and public due diligence – the latter where we review the mass of publicly-available information from the web and elsewhere, in order to gauge what issues to focus on when we gain access to the dataroom. Often we are able to alert our clients to cultural and other non-financial areas of concern or synergy.
We see due diligence as the first step in post-merger planning as well as a risk assessment and pricing exercise, and our reports provide detailed demographic and cost data as well as liability assessment. We can advise on the share purchase agreement and transition services agreement and can help to place a value on the ‘known unknowns’.
We are often requested to conduct a side by side analysis of the acquirer and target’s terms, conditions and reward programmes, identifying those which may be suitable for integration or redesign. Often, we can suggest the use of flexible benefits to ease this transition.
Our assistance during the transition and transformation phases extends to the development of retention arrangements for critical employees, the design and delivery of employee communication plans, cultural integration and employee relations support. We help clients keep a close focus on the integration activities in the hundred-day plan that will deliver the expected deal value and ensure that risks continue to be monitored and minimised.
Client Case Study – UK Financial Institution The client: The subsidiary of a major UK multinational group The issue: Our client was making a competitive bid for a banking business How Aon Hewitt added value: After appointment we conducted a detailed public due diligence on the target business, identifying a number of areas for more detailed consideration. Once the data room was open, we reviewed several hundred documents including over 40 contracts, and prepared a due diligence and demographic report to the HR team which quantified the change of control liabilities and included a three-year projection of employee costs based on our analysis of the vendor due diligence report. Once the client had got through to the second round of bidding, we advised on price adjustments and on suitable representations and warranties, ensuring that the price was not over-risk averse. We prepared a side-by-side comparison of benefit plans and drafted a 100-day plan as a guide to post-merger planning and advised on TUPE implications.
As important was our role advising and acting as a sounding board for the HR deal team in a dynamic and fast-moving situation, bringing to bear our experience of similar transactions and providing pragmatic guidance. Our client’s bid was successful and the HR workstream was identified by the client’s deal lead as the most pro-active and efficient.
About Aon Hewitt Aon Hewitt is the global leader in people management consulting and outsourcing solutions. We design, implement, communicate, and administer a wide range of people management, retirement, investment management, health care, reward and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. www.aonhewitt.com
Aon Hewitt Contacts:
Leslie Moss+44 (0)207 086 9212
Mike Curtis+44 (0)207 086 9579
aonamas.com