The Challenges



Whether you're contemplating a merger or are in the midst of one, you may be wondering:

-What types of companies should we target? How can we increase our chances of success
-How do we retain key employees in the acquired firm?
-How do we an effective senior leadership team?
-How do we create a common culture and operating philosophy?
-How do we redesign the organization and the work to meet our merger objectives?
-How do we generate enthusiasm and momentum early in the integration process?
-What kind of savings-or problems-will we have if we standardize benefits?
 

SPA can help you answer these questions through a unique, highly successful multidimensional approach to merger imple-mentation: combining the technical, managerial and behavioral aspects of change to reach--and sustain-performance objectives. Complementing the work of your lawyers, accountants, and other specialists, our approach provides a complete, robust framework for change.



Many acquisitions fail when leaders fall into the numbers trap. Paying attention to the people-side ensures that:

An overall plan matches the goals of the merger and the two merging companies.
An integrated plan fits all the pieces together.

Implementation is followed consistently. Our expertise in leadership, people management, culture change and business operations ensures that the merger will succeed. We provide focused attention to the people side in M&A: building consensus for a combined company; determining how to organize the new company; uncovering improvement opportunities; addressing the leader's role. 







The Three Phases of  M&A

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Exploratory Phase - Pinpoints targets. In a friendly merger, a Confidentiality Agreement may initiate discussions and a Letter of Intent (to merge or acquire)gets results.

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Due Diligence and Negotiations Phase - Exchange and analyze inside information to deem companies "diligent". After intensive negotiations, a Purchase and Sale Agreement (contract) is agreed and signed. Once financing is completed, the deal is "closed."

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Post-Close Integration Phase - The new firm strives to achieve planned benefits of the combination.

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1- Supporting the Exploratory Phase

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Develop a comprehensive project plan and M&A process

Our expertise on the people side, acquisitions and M&A project management rounds out your expertise in market and economic analysis to create a comprehensive plan.

Avoid missing important tasks

Create a project plan to prevent over-formalization, over-specialization and over-simplification.

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Select M&A project staffing and management options
We'll help you determine the optimal mix of internal and external resources to complete the analysis and the best forums for management control, guidance and decision-making.

Temporary or permanent M&A staffing?
Steering Committee? Sponsor? M&A Task Force?
Impact on top management's workload and identify options to minimize risk.
 

Create a formal set of Guiding Principles

Through executive workshops and individual conversations we build consensus and ownership around a powerful set of Guiding Principles that:

Focus the entire M&A process. Harmonize and simplify potentially discordant voices from the vision, values, mission, business and people strategy. These specific, compelling statements describe the newly created company.
Inform and shape key decisions such as benefits and compensation and provide metrics for the new business.
 

Create a process to screen and target acquisition candidates
Business brokers can overwhelm companies moving toward acquisition. Even a simple evaluation takes time and distracts management from its business. We will:

Develop selection criteria for acquisitions, based on Guiding Principles and people-side considerations, to screen candidates.
Design a process and clarify roles to focus responsibility for handling banker contacts and initial assessment.
 

Help leaders to be most effective during the M&A
Acquisitions can seem intoxicating. Managers are often drawn to the excitement of the deal at the expense of other demands. Evaluating and negotiating can be so intensive that senior managers sometimes fail to spend enough time planning how they will operate the combined company.

Our counsel helps leaders link their most important goals to specific plans, including personal plans to lead and set the right example for the new company. It also helps leaders determine their new roles as the merger proceeds.
We coach transition teams to determine how the new firm will be run. This can begin during the Exploratory Phase.
 

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2- Supporting the Due Diligence and Negotiations Phase

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Identify risks and opportunities on the people side
Financial assumptions and models can be so all-consuming that all non-financial factors are ignored. Often we find multi-million dollar risks and potential improvement in benefits, compensation and risk management coverage and some surprising risks in managerial depth or cultural mismatches in the acquired firm. We can help assess the people-side merits:



-leadership styles

-centralization/decentralization philosophy

-risk management and liabilities

-attitudes on customer service

-benefit plans and funding

-compensation costs and labor efficiency

-HR compliance and legal exposure

-information systems

-staffing and motivational factors

-business process improvement opportunities

-organization design/job design concepts

 

We will help you determine which cultural, leadership and organizational factors will influence the purchase price, the integration plan and chances of success.

Create a comprehensive Post-Close Integration plan
Our change management plan will help you quickly achieve the merger objectives within the organization's limitations and strengths. Plans are customized for each business but use techniques such as:

-Transition Teams
-Effective multilevel managerial structures to coach, guide, make decisions and lead the integration phase
-Employee groups to spread the Guiding Principles
-Contingency planning: the What if Analysis
-Communications Planning
-Assessment of employee commitment
-Strategic Analysis of Operations.
 

The plan itself will have tracks for topics such as:

-New organization structure and key personnel: design of jobs, pay grades/bonus, organizational areas that help achieve business strategy
-Personnel: Retention, transitions to new roles, career counsel/mentoring and outplacement
-Processes, procedures and systems: an Operations Strategy that will incorporate the best elements of each firm or other firms-
Metrics: metrics and reporting systems for successful integration
-Customer relations
-Communications: internal and external
-Employee Compensation and Benefits programs and administration
 

Solid Leadership Decisions
Top managers planning the acquisition need advice about how to organize and staff the new company. We can provide ideas and Best Practices on organization design, leadership skills, and staff assessment. Our expertise in connecting business and people strategies will help you create effective strategies to positively impact the bottom line.

-Organizational Design assessment
-Executive Assessment and Selection
 

 

 

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3- Supporting the Post-Close Integration Phase

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Mergers are difficult transitions for any organization because everyone must think and act differently about so many different aspects of the business. Often, companies need to "re-wire" their organization while trying to accomplish the new organization's work.

"Re-wiring"-implementing an integrated human resource strategy-should support the new organization's business strategy and the desired Guiding Principles. It should happen at three levels:

-Organizational (structure, roles, rewards, processes)
-Individual (the way people work together, individual and small group goals)
-Leadership (strategy, governance, supervising work, external relationships and modeling new values)
 

Ideally, the blueprint should already have been developed, but often companies need to revisit their plan after the close. To accelerate this process, Aon Consulting draws upon its solid methods, survey tools, diagnostic processes and extensive experience to evaluate organizational and operational effectiveness. Our support combines an in-depth under-standing of business realities (competitive dynamics, business strategy, and financial structure) with organizational realities (mission, depth of capabilities, capacity to learn, and readiness to change).

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Regardless of the pace, culture or degree of integration Rath & Strong's project planning and leadership counsel can easily extend to the Post-Close Integration Phase. A typical integration phase sees seven additional support needs.

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Create an effective senior management team
Our leadership tools help bridge differing cultures, styles and personal objectives of a typical merger or acquisition.

-Common Vision and Strategy Workshops
-Experiential Learning Workshops
- Creating effective governance groups
 

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Build a new culture
High performance organizations usually require significant employee participation, innovation and teamwork. We work with transition teams and ongoing cross-departmental teams to plan and implement change. As employees see these projects succeed, their confidence in the change process grows. This in turn spreads enthusiasm for the integration and the new culture.

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Our efforts include:

-Planning Participation
-Team Launch Workshops
-Coaching
-Interactive simulations
 

Meet integration and business operation goals
The post-close phase presents so many tasks that managers may lose track of the original objectives or critical tasks like customer relationships. Setting goals and monitoring performance are essential.

-Create and guide an Integration Steering Committee
-Workshops in Strategic Business Perspective
-Customer Scorecards and Operational Dashboards
 

Implement the new organization design
We can continue to counsel on organization design by supporting

-Organization structure
-Competency models
-Job descriptions
-Compensation plans
-Assessment and selection
 

HR policies, procedures and processes that support the Guiding Principles
SPA helps the HR department develop policies and procedures for the entire firm. We can also generate and evaluate options for insourcing and outsourcing, and future HRIS technology acquisitions through:

-Performance management (appraisal, feedback)
-Compensation
-Recruiting, selection and promotion
-Internal communications
-Handling employee challenges
-HRIS Systems, including payroll, benefits administration and mandatory HR compliance reporting
-Vision and value deployment through the firm
-Workforce assessment
-Developmental and training programs
 

Business processes that match customer, cost, quality and employee satisfaction goals
In implementing a merger, you want to make sure that you tap the best employee ideas from both companies and improve your overall value to customers and shareholders. Our expert understanding of best practices and proven techniques create breakthrough improvements and lasting change. We provide:

-Business Process Redesign and Management
-Opportunity Assessments
-Supply Chain Management, Total Quality, Six Sigma
-Customer Loyalty Analysis
 

Rationalized employee benefits and compensation
Access to individual employee statistics allows detailing options for benefits and compensation

-Develop tactics and timelines for the merger, introduction or disposition of benefit plans
-Evaluate current health and welfare plan designs, census data and claim/loss experience
-Evaluate retirement plan designs and investment data
-Identify active and potential liabilities in plans maintained by the merger partners and determine how to solve these liabilities
-Analyze costs and benefits of various plan designs
-Determine how to handle health, welfare, and retirement coverage during the transition
 

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Conclusion

Invariably, merger integration is more complicated and time-consuming than predicted. Although good planning is essential, integration plans must do more than just mitigate risk: they must help build the foundation for long-term organizational effectiveness. Our wide range and breadth of services and experience will prepare you for the road toward long-term growth and success.



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