I've always been a great believer in MBWA, 'management by walking about'. I think it's the only way to really feel the pulse and temperature of a firm and to quickly pick up on new ideas and things that need fixing. That makes me allergic to companies that put up barriers to open communication. For instance, management imperiously sealed away in offices whilst other employees 'gopher' in single-occupancy cubes.
It runs deep with me. I've always thought that in evaluating companies for acquisition, even before you've waded through the numbers you can tell which companies are likely to be combined successfully simply by entering their offices and feeling the atmosphere. The best firms exude 'buzz' – not frenetic hipsterish over-excitement, but a mature hum of quiet confidence that hits you as soon as you walk in the door and that emanates from every employee, whatever their role.
So it's been ever frustrating to me why such little attention is paid to the 'people factor' in the evaluation of M&A deals. I've always put it down to the fact that people are complex and simply not as easy to analyse, evaluate or appreciate as the numbers. Of course entrepreneurial or high tech business deals tend to be led by those with sales or finance backgrounds for which the spread sheet is the ultimate comfort blanket. That, combined with a suspicion that those who excel at the 'soft' side of business will lack the financial nous to be allowed anyway near the 'strategic' early stages of a deal.
Typically, it's not until you get into the due diligence and the actual integration of the organisations that the negotiators begin to think they need some people help in 'making the numbers'. Nevertheless, I still believe that if you don't take the people thing seriously and early enough - particularly in highly people-dependent entrepreneurial businesses - it can quickly kill the value in the deal. Imagine my delight then, when research published recently by London's Cass Business School found 60 per cent of non-HR and HR executives agreed post M&A deal issues could be better resolved if HR teams were involved earlier.
Frighteningly, interviews with 31 professionals and in-depth conversations with seven found only ten per cent of companies engaged with specific people issues – by included HR resources – at the targeting stage of a deal, while 81 per cent involved them at the integration stage, too often only once the merger or acquisition was announced. Respondees suggested this was too late and that without HR involvement, problems surfaced and expected returns on investment either didn't occur or were held back significantly. In fact, the research found the top reason cited by respondees as contributing to the failure of a deal was 'culture'.
To my mind this reveals a fundamental lack of appreciation of people as a strategic factor in the successful development of the business. It's vital for companies to focus on the people at the due diligence stage of a deal if only to work out if the people in the organisations could work together. If not, it's better to look elsewhere.
Overall, though, the message is clear. To increase your chances of success in M&A, view people as a strategic factor, not a tactical afterthought.
So it's been ever frustrating to me why such little attention is paid to the 'people factor' in the evaluation of M&A deals. I've always put it down to the fact that people are complex and simply not as easy to analyse, evaluate or appreciate as the numbers. Of course entrepreneurial or high tech business deals tend to be led by those with sales or finance backgrounds for which the spread sheet is the ultimate comfort blanket. That, combined with a suspicion that those who excel at the 'soft' side of business will lack the financial nous to be allowed anyway near the 'strategic' early stages of a deal.
Typically, it's not until you get into the due diligence and the actual integration of the organisations that the negotiators begin to think they need some people help in 'making the numbers'. Nevertheless, I still believe that if you don't take the people thing seriously and early enough - particularly in highly people-dependent entrepreneurial businesses - it can quickly kill the value in the deal. Imagine my delight then, when research published recently by London's Cass Business School found 60 per cent of non-HR and HR executives agreed post M&A deal issues could be better resolved if HR teams were involved earlier.
Frighteningly, interviews with 31 professionals and in-depth conversations with seven found only ten per cent of companies engaged with specific people issues – by included HR resources – at the targeting stage of a deal, while 81 per cent involved them at the integration stage, too often only once the merger or acquisition was announced. Respondees suggested this was too late and that without HR involvement, problems surfaced and expected returns on investment either didn't occur or were held back significantly. In fact, the research found the top reason cited by respondees as contributing to the failure of a deal was 'culture'.
To my mind this reveals a fundamental lack of appreciation of people as a strategic factor in the successful development of the business. It's vital for companies to focus on the people at the due diligence stage of a deal if only to work out if the people in the organisations could work together. If not, it's better to look elsewhere.
Overall, though, the message is clear. To increase your chances of success in M&A, view people as a strategic factor, not a tactical afterthought.
Typically, it's not until you get into the due diligence and the actual integration of the organisations that the negotiators begin to think they need some people help in 'making the numbers' iDeals m&a news.
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