Human resources mergers and Acquisitions checklist
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Our HR due diligence checklist covers everything you need when preparing for or performing due diligence on the human aspects of a business. If you’re trying to do cultural due diligence in a hurry, our digitized template for HR due diligence contains all the critical data points to ensure no stone goes unturned. Show
Whether it’s an acquisition or a merger, news of a big change causes a wave of anxiety through the company being sold or the two joining forces. It’s the job of HR to ensure a calm and smooth transition. Throughout the process, HR will be the point of contact for employees seeking guidance and reassurance. It’s not uncommon for the organizations involved to have distinctly different corporate cultures, management styles, problem-solving methods and workplace structures. HR teams must do their due diligence if they want to ensure smooth business operations on day 1. If the business reorganization is handled poorly, it can have a negative effect on the morale and productivity of your employees. Their continued loyalty and performance are often contingent on how this process is handled. For the M & A to be successful, it’s important that key employees be retained. HR Due Diligence ChecklistGeneral HR Agreements & Contracts HR Policies Benefits Compliance Post-Merger Integration  International Payroll ExplainedLearn from IRIS FMP about streamlining international operations. Read here Pre-Merger Due Diligence HR ChecklistGeneral HRDiving into a company’s human resources structure offers a holistic view of the target company and its employees. The knowledge you glean from your HR Due Diligence can help you integrate cultures and policies post-merger. Make sure you have the following information:
Agreements & ContractsAn audit of the company’s HR agreements is essential for protecting yourself from any contractual limitations you might be inheriting. It’s also an opportunity to make sure your employees have signed everything they need to. Collect and review labor contracts, employment contracts, tax information etc. Documents such as:
Human Resources PoliciesPolicy documents and codes of conduct underpin the people management structure of the business you’re merging or acquiring. It’s important that you audit these policies to make sure that they align with your own policies and meet all legal requirements.
ComplianceHR departments are usually responsible for ensuring that the company is compliant with current legislation. Performing your due diligence here will ensure that the target company isn’t cutting corners, because the cost of non-compliance can be steep.
BenefitsA decent benefits package is key to employee retention. During a merger, many employees will worry about their benefits packages. Will it be kept or scrapped? Will essentials like health plans be taken away? You will want to dive deeply into the target company’s compensation system to appraise its suitability. Does it cover all the things your current business does? Is it competitive and compliant? Documents and information you need to answer these questions include summaries of benefits coverage (SBCs), pay information, and the pay structure. Be sure to collect the following:
Post-Merger Integration ChecklistWhen the merger is complete, your HR department needs to switch gears in order to provide a seamless day one transition. This will help ensure a consistent quality of service to customers and stakeholders.
How to Acquire HR Information from a BusinessIf you and the target company are on good terms, it’s easy to acquire the information you need. Requesting org charts, policy manuals and handbooks requires the work of an email. You should also request access to any databases or spreadsheets detailing HR metrics and plans. Another useful source for HR teams is employee surveys and suggestions. This can give you a sense of the mood and culture of the business you are integrating. You may be in the uncomfortable position of working from an unfriendly deal or hostile takeover. In these situations, you may find it hard to locate a helpful point of contact. So you may have to get creative. Seek out published reports and news stories about the target company for information. If you can, locate ex-employees or board members. They may not have a stake in the situation anymore and may be able to help. Finally, you can reach out to entrenched 3rd parties. Customers, suppliers and recruiters often know more about the inner workings of a business than you might think. Ultimately, when the merger goes through, you will gain access to most of the information you need. But waiting that long will disrupt the HR integration process. This will have knock-on effects further down the business. Performing your due-diligence beforehand will ensure a seamless day 1 integration that limits business disruption. What is HR role in mergers and acquisitions?HR professionals are often involved in the process by advising management on human resource matters, including using surveys and other metrics to gather relevant data, identifying potential conflicts or HR challenges between the two companies, integrating HR practices and company cultures after an M&A, and managing ...
What is included in HR due diligence?HR due diligence typically involves investigating the target company's human resources department, in addition to its policies and processes in an effort to better maximize employee potential. It may also examine the target company's workplace culture and leadership structure.
What is a challenge for human resource management during mergers?Maintaining Benefits and Contracts. One of the main challenges HR faces during the merger and acquisitions process is maintaining employee benefits. This includes a number of different facets, such as: Health insurance.
What is a major HR reason for the failure of many mergers and acquisitions?Employee Retention Issues
This leads to another HR challenge common in mergers and acquisitions: employee retention issues. While some reduction in workforce might be unavoidable, more wide-scale layoffs can cause morale to plummet — and remaining employees to look for other opportunities.
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