Different businesses use tools of mergers and acquisitions for achieving organizational objectives. Business tools that have substantial impacts on the staff members of the company at every individual stage as two companies attempt to amalgamate into one. A merger is the fusion of two or more diverse organizations under one owner and administration structure. On the other hand, an acquisition is the procedure of one business entity acquiring other entity’s control by purchasing or stock swapping or any other method.
Mostly it has been found that around 70 to 90 percent of all Mergers & Acquisitions are failing to complete their projected and financial objectives. Often, this failure rate is contributed to several Human Resource related factors including management styles, loss of key talent, diminished trust, clashing cultures, poor motivation, lack of communication, and uncertainty of long-term goals. The significance of managing public issues in M&A context and highlighting the HR professionals’ role is the main thing to know about. These professionals are adept at identifying solutions, recognizing potential problems, and persuading management to adopt them. There are five stages of merger or acquisition transaction as well as different business cases of M&A. It deals with the major issues which should be managed in an attempt to help HR professional in tackling challenges and practical M&A transactions realities including:
· Creation of new-fangled policies for guiding newer organization
· Retention of chief employees
· Selection as well as downsizing of an employee
· Growth of compensation strategies
· Making complete employee advantages program
Human Resource Role in Merger & Acquisitions Transactions
Usually, the deliberation of merger or acquisition comes along with mixed feelings such as fear, enthusiasm, excitement, uncertainty, and resistance. These expressive reactions might arise at each company level. How the company deals with its staff members during, before and after transaction might have determined the impact on the operation success. Mergers and acquisitions both present considerable challenges to Human Resource professionals. The M&A process needs administration of both companies for considering all allegations of a recommend merger or acquisition ahead of agreeing to one which is unavoidably engaged in discussing public issues generated by proposed merger or acquisition. Often, Human Resource professionals are employed in the method by management advice on the matters of the human resource using surveys and several other metrics for gathering significant data, recognizing potential conflicts among two organizations, company cultures after merger & acquisition, integrating Human Resource practices and supervising several talent decisions like layoffs.
Moreover, issues related to cultural compatibility often occur while bringing collectively two or more cultures in the process of Merger & Acquisitions. Because culture includes assumptions and beliefs shared by employees of the company and manipulates all group life areas, the integration of Merger & Acquisitions always has misalignment a degree, despite perceived comparability between two organizations. And cultural clashes might influence essential M&A outcomes, focus on cultural alignment has been recognized as the major challenge in Merger & Acquisition transactions.
Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisory, Joint Venture Advisory, Financial Advisory, Private Equity, Debt Financing and International Business Development. These Services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.