Mercer | M&A Transactions Report


41% of M&A buyers report less time for due diligence, says Mercer’s global M&A report

  • 10 March 2016
  • United Kingdom, London
  • 33% claim that sellers provide less information about assets for sale 

With global M&A activity up 32%[1], both corporate and private equity buyers and sellers are facing a host of risks in ensuring successful M&A transaction outcomes. According to the inaugural People Risks in M&A Transactions report from Mercer, people risks remain top of mind for both buyers and sellers, including such pain points as employee retention, cultural integration, leadership assessment, compensation and benefit levels and overall talent management.

These people-related challenges exist in a highly competitive deal environment featuring truncated timelines, less access to information and increasingly activist shareholders. In fact, 41% of buyers report less time to complete due diligence compared to three years ago, while 33% claim sellers are providing less information about assets for sale. Meanwhile more than one-third of sellers (34%) are finding more and more of their divestment resources are required to address HR issues.

According to Adam Rosenberg, Mercer’s M&A leader for Europe said, “Many buyers and sellers are professionalising their approach to diligence and focussing more on key HR and people issues including people related financials, talent management and retention. Typically, the more successful deals typically are those where people risks are addressed at the same time and in the same way as broader deal risks.  Gone are the days when people risks are addressed after the deal signs.”

Mercer’s view is that people risks are even greater when dealmakers look beyond their own markets, which they are increasingly likely to do; 50% of respondents reported recently conducting cross-border deals, and 24% are more likely to consider multi-country transactions than they were in January of 2014. Legislative and regulatory issues, cultural and operational mismatches, and differing leadership skills and expertise are all risk factors that increase substantially when attempting transactions outside of a home market.

“Both buyers and sellers tell us they need rich data, unique insights and practical guidance to maximize transaction value and reduce people-related risks,” said Jeff Cox, Mercer’s Global M&A Transaction Services Leader. “The goal of our research is to enable business leaders, inside and outside of the HR function, to make more informed people decisions in the current challenging global deal environment.”

Mercer’s research shows that by managing the investment in people with the same discipline and rigor they manage balance sheet risk and other capital investments, organizations can successfully drive value from several key people-related areas.

For Buyers:

  • Assess leadership team and key employee capabilities
  • Develop effective retention strategies
  • Have a clear culture, communications and change management plan
  • Evaluate HR service, delivery and design needs
  • Adopt an enterprise or global view to effectively manage benefits
  • Understand the market competitiveness of rewards and leverage existing total reward programs to attract and retain the right talent

For Sellers:

  • Identify critical employee groups and consider a retention program
  • Leverage experienced sell-side advisors and separation specialists
  • Consider providing a sensible, appropriately priced Transition Services Agreement
  • Document a clear talent management/staffing plan

The need to adopt this framework is highlighted by the fact that more than 50% of businesses surveyed experienced delayed closing for global deals – an outcome that does not bode well for rapid integration and value creation.

To download a free copy (English only) of the Mercer People Risks in M&A report, please go here.

Notes for Editors

About the People Risks in M&A Transactions Report
As a leading global M&A advisor on people issues to buyers and sellers in corporate and private equity transactions, Mercer based its findings on 851 data points, including survey responses from  323 M&A professionals,78 interviews and analysis of nearly 450 transactions (of which almost 60% were cross-border deals) by Mercer’s M&A Transaction Services Business during 2015. Forty-four percent of firms surveyed had more than 10,000 employees and 38% had revenue exceeding $5 billion. In addition to HR executives, 57% of respondents were from private equity deal and operations teams, corporate development, finance and operational leadership positions, bringing a diverse range of perspectives to the research.

About Mercer
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and careers of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries.  Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue of $13 billion and 60,000 colleagues worldwide, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit Follow Mercer on Twitter @Mercer.

[1] Thomson Reuters. Mergers & Acquisitions Review (First Nine Months 2015).