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The Role of HR in Managing Employee Relations During Mergers and Acquisitions

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Mergers and acquisitions are two distinct types of business transactions, but they both involve the process of combining one or more businesses.

In the case of the former, the combination can be described as a mutual coming together of two companies, while the latter refers to one company taking control of the other.

Of course it’s more complicated than that, and there are also different types of each process, but overall, mergers and acquisitions involve two companies becoming one, just with different fine print.

 

What Are Mergers and Acquisitions?

 

So what is the fine print?

Well, it’s actually more than just a few details. Mergers and acquisitions are very different processes, from the intention behind the process to the actual steps taken and the end result.

 

Mergers

 

A merger occurs when two companies decide to come together to form a single, unified entity. Normally, the businesses in question are of a similar size and have similar market presence, so by joining forces, they’re able to combine resources, management structures, operations and more in order to improve both competitive edge and profitability.

Normally, mergers are collaborative, meaning that both parties are fully onboard, coming to agree on terms that provide mutual benefits. The newly formed company tends to retain elements of both previous businesses, with the overall intention of creating a new enterprise that is stronger together than they were separately.

Sort of like LEGO’s early 2000’s Bionicles. Kids could build individual sets to create a whole lot of small figurines, but if the pieces from three were combined, they’d be able to build one super Bionicle that was far cooler than any of the smaller, individual Bionicles.

It’s generally accepted that there are two main types of mergers:

 

 

 

In the case of the former, the objective of the merger is most likely to pool resources and stop competing against each other unnecessarily, thus gaining more market share overall.

In vertical mergers, however, the idea is to bring two companies from different stages of the supply chain together in order to be able to cover more of the overall market process internally, cutting costs and increasing profits.

 

Acquisitions

 

Acquisitions are less mutual in terms of power and control. The acquisition process involves one company taking control of the other, essentially absorbing it.

This either allows the acquired company to operate under its original name or to be absorbed and rebranded under the company that acquired it in the first place.

Now, there are two types of acquisitions, depending on the stance of each company:

 

 

 

Acquisitions can occur as a result of many different situations, ranging from the leaders of a company being keen and ready to step away from the wheel to another powerful company swooping in and taking control whether the acquired company likes it or not. This may happen when the company being acquired isn’t in a position to make big decisions due to financial issues or something else.

Normally, acquisitions occur as a result of an intention to expand market share, enter new markets, acquire new technology, take on new staff or eliminate the competition.

 

 

Human Resources in Mergers and Acquisitions

 

When it comes to undergoing the actual merger and acquisition processes, there’s a lot involved. From the legal perspective of wanting to get everything right to ensure that customers are still kept happy while everything’s going on, there’s a great deal to manage.

But one of the most important aspects of these processes is employee management, and that’s where the human resources department comes in.

Understandably, both mergers and acquisitions can be tough for employees even under the best of circumstances, with plenty of changes taking place. They may have to move offices, change job titles or even work under different bosses.

That’s why the HR team is around – to evaluate the situation beforehand, ensure compliance, plan what the hybrid workforce will look like, communicate with employees, restructure management, plan cultural integration and eventually, integrate HR departments.

And that’s putting it simply.

HR plays an important role throughout the merger and acquisition processes, from before anything is even implemented until everything is said and done.

 

Before, During and After the Merger or Acquisition 

 

As soon as an impending merger or acquisition is announced, there tends to be a great deal of concern and sometimes even fear from employees. They’re worried about losing their jobs, potentially having to relocate and sometimes, change roles. In these cases, it’s HR’s responsibility to communicate with staff as openly and honestly as possible, tempering concerns and preventing panic.

During the actual process, however, things can get chaotic. No matter how well you’ve planned, communication is always tough and there are bound to be some disagreements, both big and small.

Finally, once the merger/acquisition is complete, it’s time for employees to get used to the new normal. However, that doesn’t always mean smooth sailing.

Throughout these three stages – pre, during and post-merger/acquisition – HR is responsible for

 

 

 

 

 

 

 

 

 

 

In some ways, managing employees can be the most difficult part of dealing with mergers and acquisitions. From having to plan everybody’s new roles, including who is retained and who is let go, to needing to engage with staff and ensure everyone is happy.

Thus, HR plays an integral part in the process and in many ways, is the reason that mergers ad acquisitions are successful at all.

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