Note: This article originally appeared on FEI Daily.
By Mike Lewis
Aerotek Director of Strategic Solutions
Mergers and acquisitions in the U.S. sustained a vigorous pace in the first quarter of 2019, recording 900 transactions with a total market valuation of $79.5 billion, a 35 percent increase year over year. For the remainder of 2019, J.P. Morgan’s Global M&A Outlook Report predicts robust activity will continue, driving shareholder value.
However, to maximize the potential benefits of M&A transactions — cost efficiency, tax advantages, enhanced revenue and market share gains — companies should ensure they have the right talent acquisition and management practices in place.
From the moment the transaction is announced (or even rumored), through the integration and even after the merger’s go-live date, the M&A process can create staffing challenges for the companies involved. To sustain productivity and reduce disruption, an agile and responsive staffing strategy should begin concurrently with other crucial functions, in the planning stage.
Even as they begin to contemplate a sale, companies may seek headcount reductions to create a balance sheet that’s more attractive to potential buyers. If news of the proposed transaction gets out, voluntary turnover may exacerbate the staffing shortage.
To forestall this, companies may offer compensation for current employees who stay on for a set amount of time. However, timelines are often fluid during the merger process, as companies might not know how long an enterprise resource planning (ERP) process can take to consolidate accounting procedures, eliminate redundancies and create or modify procedures. Leaving key positions open at the same time financial responsibilities necessary to prepare for the change in corporate ownership and structure are ramping up is risky.
Anticipating an uptick in attrition, many companies choose to be proactive in securing contingent talent to fill staffing needs, increase agility, handle critical operations and preserve the transfer of knowledge that might be lost with a gap in support.
Staffing complexity during a merger is further driven by the need to continue parallel operations in two companies while ensuring there is no deterioration in the customer experience, which is especially crucial in situations that involve policies, accounts and services. Functional areas such as accounts payable and collections need to continue in multiple systems until fully integrated.
During the ownership change, employers may need staffing support to carve out balance sheet items, discontinue operations after the separation, open new balance sheet projects and handle other transactional requirements. If a company is losing access to shared resources or assets, the workload may include determining solutions to replace those capabilities and incorporate them into the work process.
The merger may also trigger additional need for regulatory and compliance skill sets. Past transactions need to be analysed with regard to Anti-Money Laundering (AML) and KYC (Know Your Customer) requirements to determine if their risk level have changed and if any new laws now apply.
Relocation can also spur staffing changes, whether it’s a consolidation of locations, recentralizing operations or adding offices to handle a new company focus or market. While these positions can be temporary, permanent or temp-to-hire, broad-based hiring may be needed to replace workers who don’t make the transition. In this instance, companies can benefit from regional market and labor analysis, with a focus on the talent landscape overall and per skill set.
Lastly, after the merger or acquisition has been finalized, the company may have a different vision for the finance and accounting teams, which could create turnover and/or a need for additional staff.
A merger or acquisition is an intense experience for all the employees involved, but company leadership can ease the transition with plans to keep the sales force stable, merge systems and processes, and prioritize the customer experience. Having a gap talent solution in place can go a long way towards making this happen.