In a rapidly changing landscape, companies go through many mergers and acquisitions. These transactions enable organisations to bring on board the right people with talents, technologies and ideas so that they can continue to innovate and grow. However, there is a complex process behind these transactions. When organisations give sufficient attention to the human side of the transaction, they are able to avoid losing transaction value. When they effectively address the human side, they are even able to create a lot of value.
Pension risks and labour relations are important points to consider, particularly at the start of the transaction. After the transaction has been concluded, HR plays an important role in supporting the business and its employees to make the transaction a success. HR offers this support in areas such as remuneration, assisting with the organisational design and preparing and implementing it, and setting up the HR processes and systems. HR departments with a lean structure within organisations do not always have the capacity or skills to support your M&A team during the transaction process. PwC can provide you with this flexible capacity and can support you throughout the process to ensure that you can optimise the value of your workforce in the transaction.
Once the workforce has been informed about the transaction, questions and uncertainties increase, whereas business continuity and retaining people is extremely important. That is why you should announce a structured and coordinated communications plan. You should support managers so they are able to provide effective guidance to their teams. These may be natural questions, such as: ‘will I be out of a job soon?’, ‘what’s going to happen to my salary?’, ‘will I have a new manager?’, ‘who can I turn to with questions?’.
In order to have answers to these questions, the outline of the integration and the resulting People & HR strategy are important.
In a transaction, the transition from the existing remuneration structure for management to a new structure is important. The new remuneration structure has to be in line with the strategic goals of the company. This guarantees that management has the right focus and motivation. Whether you are the purchaser, seller or an executive, we will be pleased to support you with keeping executive remuneration on the right track, before, during and after the transaction. This process can also be a catalyst for your environmental, social and governance (ESG) objectives, for example.
PwC’s People in Deals specialists work with clients globally on these questions. We do this for a full range of transactions, including acquisitions, divestitures, business restructuring and capital events such as an IPO. We drive value for our clients across the entire transaction cycle:
We can help you at an early stage in the acquisition process to establish which HR-related aspects are important and what are the associated financial and legal consequences. We determine which issues related to HR and personnel play a role and their relevance. We focus on the impact of these items, the Quality of Earningst (profit and loss account), and the net debt (balance sheet) of the party to be acquired. After all, these elements influence the value of the transaction. If necessary, we can provide the legal transaction documents regarding HR and personnel. Furthermore, we can provide you with information at an early stage about cultural matters, ESG status and other challenges that may influence the value of the transaction.
We make sure you have the right people and that they are focusing on the right matters. We determine which core decisions are necessary in the area of HR, based on the nature of the transaction. We then create a detailed project plan using the HR due diligence. This plan distinguishes the various HR function areas, such as Reward, Talent & Recruitment, HR IT and Operations Labour Law, and indicates where they overlap and have an impact on other workflows. We can naturally also implement and manage this plan for you. We can help you to put together a leadership team and organisation structure, and evaluate the culture and cultural differences. We can also help you to communicate everything to the employees during all of these changes. Finally, we will give you feedback on the financial consequences for the valuation model that was prepared during the due diligence.
We ensure a smooth transition during the unsettling times that a transaction causes for you and the employees. Based on the deal strategy, we can support creating the HR strategy and roadmap. We provide support not only on the introduction of the harmonised HR policy within the new organisational structure, but also on the development and application of HR technology, processes and infrastructure, policy, taking on staff, culture-oriented transformation, stakeholder involvement and communication flows. We ensure throughout that you do not lose sight of the aims of the transaction.
PwC has developed a People Transformation App. Together with you we use this tool to implement the administrative side of HR matters arising from the transaction, such as to offer new contracts and answer individual questions and requests. By automating this process as far as possible, we make it more efficient and minimise the risk of errors. Of course, the process is fully GDPR compliant. In addition to a smooth transition, you also benefit from having all of the information and documents in one place. In short, it is an opportunity to increase the efficiency of your HR processes.
For the purchasing party, we provide an overview of the current remuneration system and participation schemes for executives. We provide advice on the financial consequences and possibilities for retention and motivation of the management. We support the management when comparing proposals for remuneration systems from potential purchasers. We also look at the financial, tax and legal consequences of the finalisation of the current remuneration system and of any proposed new remuneration system and the participation schemes. Whether you are the purchaser, seller or an executive, we will be pleased to assist you with keeping executive remuneration on the right track during a transaction. However, even after the transaction we can support the new company with the implementation of the new remuneration policy and communicating about it.