The Management of People in Mergers and Acquisitions

by Daniel, Teresa A.

• ISBN13: 9781567203691
• ISBN10: 1567203698
• Format: Hardcover
• Copyright: 2001-05-30
• Publisher: Praeger Pub Text

Summary

Financials alone don't make an M&A deal work. Equally important is what's behind them--an organization's people. How to understand this reality and benefit from it is the thrust of this unusually comprehensive, practical, readable, but conceptually rigorous book. Daniel and Metcalf see HR executives as change agents during the delicate maneuverings before a deal is done, and then after, when it's time to tackle the fine-grained problems of integrating disparate corporate cultures and the people who vitalize them. They examine the recent and ongoing waves of mergers and acquisitions across industries, setting them in the broader context of organizational change. With concepts, theory, and real-life examples drawn from their long, impressive experience as consultants and executives, Daniel and Metcalf provide step-by-step guidance through the stages common to all corporate combinations. They define and explain the roles to be played in the process by HR professionals and executives elsewhere in the organization, and show how, by interacting productively with each other, they will thus maximize the total contribution to the success of any corporate transaction.

Author Biography

TERESA A. DANIEL is Vice President and Chief Human Resources Officer of Special Metals Corporation in Huntington, West Virginia.GARY S. METCALF is Senior Manager, InterConnections, LLC, a consultancy in Ashland, Kentucky, specializing in organizational change, particularly those that arise during the course of mergers and acquisitions.

Table of Contents

Acknowledgments	xi
Introduction	xiii
Why Merge if Most Deals Fail?	1	(12)
Some History on Recent Deal Making	3	(1)
Why Merge if So Many Deals Fail?	3	(3)
Some Reasons for Failure	6	(3)
The Human Side of the Equation	9	(1)
So, Why Merge if So Many Deals Fail?	10	(3)
Structure, Function, and Purpose of Organizations	13	(14)
Models of Efficiency	13	(4)
Human Knowledge and Value	17	(2)
What Is an Organization?	19	(8)
Organizational Culture	27	(12)
Developmental Phases	29	(4)
Defining the Culture	33	(3)
Combining Cultures	36	(3)
Human Capital	39	(20)
A Conceptual Model	41	(1)
Input: How the Organization Acquires Knowledge	41	(3)
Transformation: How the Organization Uses Knowledge	44	(6)
Output: Products and Services	50	(2)
Feedback: Measurement and Regulation	52	(1)
Summary and Discussion	53	(6)
The M&A Process	59	(34)
Identifying Target or Candidate Companies	60	(1)
Narrowing the Field of Choices	61	(1)
Selecting ``First-Choice'' Companies	61	(1)
Reviewing Regulatory Compliance	61	(1)
Conducting Preliminary Discussions	62	(1)
Signing a Letter of Intent	63	(1)
Conducting Due Diligence	63	(1)
Completing the Financial Negotiations	63	(1)
Signing the Definitive Agreement	64	(1)
Announcing the Deal	64	(1)
Closing the Transaction	64	(1)
Integration of the Companies	65	(1)
Strategy	66	(2)
Establishment of the Company's Vision	68	(1)
Early Announcement of ``Value Drivers'' and Transaction Synergies	68	(1)
Integration Goals and Timetables for Results	69	(1)
Operating Principles and Critical Success Factors	69	(1)
Organizational Structure	70	(1)
Headquarters Location and Physical Layout	71	(1)
New Name and Legal Structure	72	(2)
Processes, Policies, and Procedures	74	(1)
Corporate Cultures and Integration Strategies	74	(2)
Key HR Policies	76	(1)
Consolidation and Reduction of Headquarters Staff	77	(2)
``Re-recruit'' Top Talent and Employees	79	(1)
Technical Skills and Change Management Training	80	(2)
Roles, Responsibilites, and Expectations	82	(2)
Employee/Customer Attitude Surveys	84	(1)
Team Building, Survivor Skills, and Merger Sensitization	84	(1)
Issues and Project Plans	85	(1)
The 100-Day Path and Results	86	(1)
Constant Communication	86	(1)
The Integration Process	86	(1)
Appointment of Integration Leader	87	(2)
Transition Teams	89	(2)
Summary	91	(2)
People	93	(18)
Employee Selection Process	95	(2)
Retention Tools	97	(3)
Emotional Reactions	100	(3)
The Neutral Zone	103	(1)
Treat the Past with Respect	104	(1)
Human Assets	105	(6)
The Role of Human Resources in M&A Strategy and Execution	111	(20)
Target Screening	111	(2)
Planning/Preacquisition Strategy	113	(5)
Due Diligence	118	(5)
The Legal Minefield	123	(1)
Retirement Liabilities	124	(1)
Healthcare Issues	124	(1)
Negotiations	125	(1)
Integration Planning/Execution	125	(6)
Leadership	131	(16)
Historical Views of Leadership	132	(2)
Change Leaders	134	(1)
Leadership in M&A Transactions	135	(12)
Employee Communications	147	(18)
Implementation Strategies and Schedule	149	(13)
Other Strategies for Future Consideration	162	(1)
Conclusions	163	(2)
Legal Issues	165	(12)
Alternatives to a Workforce Reduction	165	(2)
Voluntary Reductions	167	(3)
Involuntary Reductions	170	(2)
Other Issues to Consider	172	(2)
Suggestions for Action Following the Downsizing	174	(3)
Dealing with Employee Benefits in Mergers and Acquisitions	177	(8)
Types of Benefit Plans	177	(2)
Techniques for Dealing with Target Company Plans	179	(3)
Other Considerations	182	(2)
Conclusions	184	(1)
Compensation Alternatives (Linking Pay to the New Business Strategy)	185	(8)
Employee Compensation	185	(1)
Pay System Alternatives	186	(2)
Profit Sharing and Bonus Programs	188	(1)
Executive Compensation	189	(1)
Alternatives to Compensation	190	(1)
Communication of the New Program	190	(3)
Methods to Measure HR Success	193	(6)
Efficiency Metrics	194	(1)
Strategic Metrics	194	(1)
Return on Investment Metrics	195	(1)
10 Key Human Capital Metrics	195	(4)
Why Some Mergers Succeed (and How Yours Can Too)	199	(8)
Primary Reasons for Integration Success	199	(8)
Some Stories of Mergers and Acquisitions	207	(16)
Petroco	208	(9)
Summary and Analysis	217	(6)
Appendix 1: HR Due Diligence Issues Guide	223	(6)
Appendix 2: Post-Deal Integration Checklist	229	(3)
Appendix 3: Model ``100-Day'' Strategic Plan	232	(2)
Appendix 4: Employee Communications Implementation Plan	234	(4)
Appendix 5: Key Post-Merger Employee Messages	238	(4)
Appendix 6: Sample Employee Survey Questions	242	(3)
Appendix 7: Workforce Reduction Considerations	245	(3)
Appendix 8: Guidelines for Handling Employee Termination Meetings	248	(3)
Appendix 9: Checklist of Potential Legal Pitfalls in Workforce Reductions	251	(4)
Selected Bibliography	255	(2)
Index	257