How HR can drive deal value through people
A well-executed deal keeps the most valuable asset, its people, at the core. Given the significant people risks associated with deals—and at a time of geopolitical and technological disruption—HR readiness is imperative.
Preparing for deals early and leaning on external expertise can help HR and the organisation’s wider leadership become valued members of the deal team. Addressing potential people-related risks early and in a well-ordered way is essential to driving deal value and value creation. Prime examples of people-based risks that can undermine deals include:
- not assessing overall corporate growth in conjunction with workforce strategy;
- failing to retain or recruit key talent to meet business needs;
- failing to address cultural issues early to deliver value from the start and give it the attention it deserves;
- considering the financial implications of industrial action, disputes and wider employee relation issues;
- the provision of inconsistent reward structures, inclusive of retirement benefits;
- poorly thought-out long-term incentive plans that lead to tax implications where employees do not qualify for schemes; and
- an unclear HR operating model and duplication in the organisation’s structure.
The very nature of deals means that we need to be flexible in our approach to support clients in order to lead with purpose to truly add value. PwC’s Deal specialists and HR SMEs work with clients that ultimately drive value for clients across the entire deal cycle.
Key actions businesses can take today
1. Get HR involved in the deals process
HR is often engaged in a deal just before or at the close, which prevents them from conducting thorough due diligence—and, in some instances, not completing one. This is compounded by today’s sellers’ market, where buyers face shortened due diligence periods and, increasingly, a lack of good quality data and valuable insights from the seller.
HR must operate as a strategic partner and clearly articulate where they fit in the deal context, as their involvement could help mitigate risk and accomplish deal objectives.
2. Leverage HR’s due diligence findings
By not engaging HR, a buyer or seller is taking on material risks that could significantly impact the deal price, integration strategy, transition planning and overall timelines. In some cases, it could even result in a ‘no-go’ decision or diminished synergies.
Common HR issues uncovered during deal processes include change-in-control triggers in executive agreements, high-cost severance commitments, industrial action disputes, retention and mitigation planning, underfunded defined benefit pensions, and compensation and equity plan compliance issues.
To ensure your organisation’s talent needs are met, identify strategic HR decisions that should be taken based on the nature of the deal. This could include leveraging HR’s due diligence to create a comprehensive project plan, which can also be used to manage and implement key priorities for the HR function and wider cross-functional areas once the deal is closed. The aim is to tie the financial implications back to the investment model developed during the due diligence stage.
We are here to help you
Our Deals Advisory specialists work with clients on the full range of transactions, from acquisitions and divestitures to business restructuring and capital events, such as IPOs.
We support a harmonised workforce strategy, HR technology migration, processes and infrastructure, reviewing the operating model, culture-led transformation using our diagnostic tool and communication plans, to drive value for our client across the entire transaction cycle, pre and post deal.
Contact us today.
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