The rationale for corporate deals today is as variable as the economic climate. A transaction can be a way to shed noncore assets, streamline a sluggish organization or nurture a fledgling business without expensive infrastructure. A deal can help you expand rapidly within a sector or region, acquire critical growth capabilities or achieve competitive scale.
Successive waves of deal making over recent decades, both within and across borders, have yielded data that confirm the cliché: A deal can push an organization well ahead of its competitive pack or burden it with new, sometimes insurmountable, challenges. The difference lies in understanding what will drive success for each particular deal.
The financial and operational aspects of the transaction are critical, of course. But deal failure is most often due to culture and people issues, which often don’t come to the fore until late in the transaction process. Successful deal makers pay as much (sometimes more) attention to people and culture as to finances and operations. They also understand that all of these elements are interrelated. Understanding how decisions and actions at early stages affect and shape those at subsequent stages is critical to effective implementation and sustained results.
- Do we understand all of the transaction's costs — including those related to retirement, health care and other employee reward programs?
- Does the target organization’s culture align with our strategic rationale for the deal?
- Does our HR team have the expertise to manage through the deal, from due diligence to long-term implementation? If not, what training and resources are required?
- How rapidly and to what extent should and can we integrate operations after we close a merger or acquisition?
- What kind of talent will the new organization need? Do we have it in sufficient supply? What are our retention risks?
- How do we build our leadership team?
- Do we know what factors will motivate and engage the combined and/or acquired employees?