Merger and acquisition (M&A) deals are on the increase, with data from WTW showing 46 deals valued at more than $1 billion having been completed in the last three months alone. As companies continue to do acquisitions, it is vital that the people component is not ignored, attendees at the HR Indaba heard .
The people aspect of merger and acquisition (M&A) deals has previously not been high on the agenda for companies, with most of the focus going to financial aspects and future growth opportunities.
However, this is changing as companies are realising that they need to ensure that staff are included in the process from the start to make certain that there is a full understanding of culture, values, and that staff are retained.
Dolores Mashishi, MD of DSM Advisory, said: “One thing about M&A is it has come quite late as a topic in terms of where people are involved… we’ll never see an HR person in the list, but that’s changing now.”
When she is involved in an advisory capacity, Dolores always emphasises the importance of looking at a deal from a human-centric perspective. She said it’s always important to ask why the company is doing the deal so that HR can engage with staff to provide the necessary details. “There are a lot of reasons why deals happen,” she said.
Dolores added that people need to understand what an organisation will look like after the merger, especially when it comes to cultural integration. She explained that a key reason why M&A deals fail is because of a lack of cultural integration.
Humsha Ramgobin, group chief HR officer at Mediclinic, said when the company expanded into the Middle East and Switzerland it found that there were different aspects of culture that needed to be considered in each territory.
In the Middle East, specifically Dubai and Abu Dhabi, many South African leaders went over to pioneer the expansion, some of which was also greenfields. The overarching culture became South African as a result, and it was easier for the expanded operation to adopt Mediclinic’s existing culture and values.
Part of the reason for this, said Humsha, is because South Africa is such a diverse country, which is reflected in the company’s staff demographics, making it easier to integrate.
Switzerland, conversely, said Humsha is an independent society that held onto their values. As a result, she explained, it operates as a distinct entity when compared to the parent company.
“At Mediclinic, we make loads of acquisitions all the time because we’re on a growth trajectory in terms of what we want to achieve.”
Humsha explained that it’s vital that the HR leader needs to be involved in discussions around any potential M&A activity from the beginning. Every HR leader should have a seat at the table, and if they don’t, they must make one, she said.
From this position, HR can ensure that they can start building a people solution from the beginning. It’s vital to look at culture from the get-go to see where alignment comes in, she said. Other aspects Humsha highlighted include comparing remuneration and benefit structures.
“That, for me, is what makes sure it’s a solid start whenever a merger is on the table.”
Neridha Moodley, leader of people and culture at SNG Grant Thornton, explained that M&A is like a marriage. “Sometimes it ends in bitter divorces.”
As a result, she said, issues need to be resolved as soon as they arise, and there needs to be clear communication throughout all management levels with all people speaking with one voice. “They need to say, this is where we want to go as a newly merged entity. This is how we want to get to, and then communicate that clearly.”
Employees also need to understand how the deal can benefit their careers, Neridha said.
As Dolores put it: “When people don’t know what is going on, they fill the gaps in for themselves.”
