Growing a business is exciting. Sometimes, that means you’ll be part of a merger, as your business gets folded into another, larger business. In other cases, your business will be the one making the move, acquiring another business.
Most M&A transactions focus on aspects like technology, products, and other assets. What is each business bringing to the table as they enter talks and come together?
One less-discussed aspect is HR. Yet HR is absolutely integral on both sides of the transaction. What does HR do, and why is it so vital? We explore the role HR plays in ensuring mergers and acquisitions move along smoothly.
People Are Your Greatest Asset
One of the reasons HR plays such an integral role in any M&A situation is that people are also assets. Yes, you’re buying a company that has this technology or offers that product. You’re also “buying” their workforce, the people who make the company tick.
Today, people are one of the only things that set businesses apart. That means acquiring the workforce of any given business is just as important as getting their technological capabilities.
The people are the ones who built the product or adopted the technology. They also built the business, which is likely at least somewhat successful. The team is probably a large part of the reason the company has any customers.
Both sides of a merger have a workforce, and each workforce brings plenty to the table. HR plays a key role in sorting out who needs to stay, in what roles, and how the two businesses will proceed. Without HR’s consideration, essential team members may not be invited to stay. Key roles might not be defined, and chaos can ensue.
Examining Cultures and Preventing Culture Clash
One of the trickiest parts of negotiating an M&A situation is bringing the two companies together. You might think of this in terms of systems, technology, or other operating capacity. Maybe one company uses a different operating system. Maybe you’re using SAP and they’re not.
This can lead to issues as the two companies try to integrate. You could experience complications achieving compatibility with the two systems. You may need to convert one business to the preferred system.
The same thing happens with people, particularly in terms of company culture. Even if you think the two companies have similar or complementary cultures, there will be differences. Your HR team will likely need to navigate “cultural conflicts” as you proceed with the merger.
If the HR team doesn’t attend to this, you could end up with teams or even an entire department operating with a very different culture from the rest of the company. That can cause headaches and conflicts, especially if people from various departments must work closely together.
The HR department has a key role in bridging gaps between the company cultures to make sure everyone can work together in harmony.
Keeping an Eye on the Law
Last but certainly not least, your HR team is also handling your legal compliance. While good company culture should be in step with compliance, you’ll want to keep an eye on this area during an M&A.
In turn, you want to be sure that the acquired company is meeting or exceeding your compliance goals. You’ll also want to be sure you’re on the right side of the law as the companies merge. For that reason, it may be a good time to review policies and procedures.
HR is in the best position to complete this work and keep an eye on both culture and compliance as the merger moves forward.
An M&A often signals a larger workforce and a larger company. That could mean you need some new tools to effectively manage any part of your HR. Discover what an HR Hub could do for your business as you keep growing.