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Freshfields Transactions

| 1 minute read

Post-acquisition integration: The top five people issues to consider

People are a fundamental part of any business and significant HR challenges can arise in almost any M&A transactions, including after closing. If you intend to integrate an acquired business (and its employees) into your existing operations, it’s critical that there is a coherent integration strategy. Here are a few tips to help guide you in what you need to consider:

  1. Culture: companies should not ignore general industrial relations issues and the need to maintain/build a strong rapport with the workforce. These are often just as important as the legal issues (and more so from an employee’s perspective). It will therefore be important to issue carefully drafted employee communications, to handle information and consultation processes sensitively and to be alert to how differences in national and organisational cultures will need to be taken into account in the post-closing integration strategy.
  2. It’s all about timing: it is important not to delay planning for post-closing people integration until late in the transaction as there will likely be specific timing and process requirements. Not only that, but an acquirer should set the narrative and the tone of communication for staff.
  3. Restructuring and redundancies: local regimes differ significantly in relation to the freedom that a company has to reorganise its workforce following a transaction. The law is key but the local environment also plays a big part here, particularly in countries like Indonesia and China.
  4. Harmonisation of T&Cs: an acquirer’s desire to reduce costs and achieve consistency in employment terms and conditions across the workforce must be balanced against local law restrictions on such changes and the need to obtain employee consent and/ or comply with information and consultation obligations. It should also be balanced against cultural considerations (see above).
  5. Retention: Holding on to key target employees in a newly acquired business is often essential to ensure a smooth transition between owners. It is therefore important, at an early stage in the transaction, to identify the key employees, consider any specific retention risks and think innovatively about how best to retain and motivate those key employees before and after closing.

The Freshfields People and Reward team, backed by the firm's StrongerTogether network, can (and do) help navigate these sensitive issues and potential pitfalls. Please get in touch if you would like to learn more about how we might be able to help you.


global, mergers and acquisitions, restructuring, culture