Managing Human Capital during the M&A Process

September 29, 2016


Highlights from PwC’s recent Silicon Valley roundtable

Recently, 25 Corporate Development and Human Capital leaders gathered for a PwC M&A Roundtable in Silicon Valley to share war stories and discuss how to better manage people—or human capital—during the M&A process. Attendees came from social media, internet, SaaS, and other technology organizations, and included newly acquisitive companies as well as long-established “serial acquirers.” Topics included culture integration, the empowerment of leaders, and employee engagement.

Culture Integration

Roundtable attendees agreed that culture integration is not always a top management priority during the deal process and leaders often struggle to consistently communicate a clear vision for the new company. Yet without this clarity it’s challenging to drive desired behaviors, which can make meeting business goals for the combined company difficult if not impossible.

It’s critical to study culture early in the deal process, use assessment tools/methods such as leadership interview questionnaires, team building measures, and employee pulse surveys, and address culture issues throughout the deal lifecycle.

Which tools or methods have you utilized to perform a cultural assessment?

What are the results of your culture integration efforts?

chart1

Empowering Leaders

One common problem cited by the participants is that leaders appointed to collaborate with HR on the future-state organization often lack the right decision making tools, experience, or motivation. It’s important to appoint these business and functional leaders early in the deal lifecycle, empower them with clear decision rights, and hold them accountable to partner with HR and communicate clearly about the organization design process. A coordinated end-to-end approach from integration vision, to operating model, to organization design and workforce transition is necessary to keep the new business on track.

What are the most challenging barriers that you face in order to effectively design a future state organization?

What strategies have you employed to minimize organizational disruption during the deal process?

chart2

Employee Engagement

Compensation is often used to retain employees and this helps to stem early talent loss, participants said. But longer-term engagement also requires attention to non-monetary issues, such as communicating deal goals, the promise of meaningful work, and a continued investment in their careers. For example, participants discussed the importance of equipping managers with the tools and knowledge to lead their new teams effectively. Also, investment in mid- and early-career leadership development (e.g., trainings, accelerator programs, etc.) is a very effective way to engage and retain talent.

Conclusion

Without a doubt human capital issues can complicate the M&A process. These challenges vary for each transaction but there is one constant: prioritizing human capital issues and setting a strategy early on to address them greatly improves the likelihood of success.

To learn more about these topics or our Silicon Valley roundtable series, contact Marc Suidan or Carrie Duarte. For more information about deals, please visit www.pwc.com/us/deals.

Source of all charts: Based on anonymous polling at Silicon Valley Roundtable


Related Links

Contacts

Bob Saada

US Deals Leader Tel: +1 (646) 471-7219 Email: bob.d.saada@pwc.com

Curt Moldenhauer

US Deals Solutions Leader Tel: +1 (408) 817 5726 Email: curt.moldenhauer@pwc.com