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Thriving During Mergers and Acquisitions
Day-to-day business can be challenging on its own, but when Mergers and Acquisitions (M&A) are in the works, things can become especially interesting.
M&A activity is on track for another strong year, so questions Global Mobility, Relocation and Human Resource departments should be asking right now are:
“Are we ready for a fluid and potentially aggressive M&A environment?” and“ Where do we start when we learn about a merger or acquisition that impacts our business?”
Awareness and Preparation Are Key
Benjamin Franklin wisely said,
“By failing to prepare, you are preparing to fail.”
Based on NEI Global Relocation’s (NEI) experience with M&A transitions, five key Action Steps that impact the successful integration of companies have been identified:
- Ensuring Key Stakeholders are at the Planning Table
- Addressing Cultural Differences
- Assessing Global Mobility Needs and Implementing New Strategies
- Managing Expectations and Working through Differences
- Effecting a Calm Transition
These elements may feel as though they are occurring simultaneously, but NEI’s expertise with M&A can guide you through each Action Step to skillfully embrace the vital components necessary for you to thrive, rather than just survive.
Given the potential for increased M&A activity, awareness of these steps can help Global Mobility, Relocation and HR professionals play a more strategic role should your company head in that direction.
After all – when the M&A ink is dry and the lawyers and investment bankers leave the scene, confusion often reigns for those who are not primed for the challenge. Even normal daily decisions of the past can prove problematic in the new and merging environment.
Ensuring Key Stakeholders Are at the Planning Table
Action Step One
Morgan Stanley’s ”M&A Trends Outlook” report confirms that deal-making is likely to accelerate going forward and factors cited as most likely to drive future activity include:
- Well-capitalized companies making acquisitions in their core businesses.
- Financial sponsors, which are holding record amounts of capital, deploying it in acquisitions.
- Uneven performance among companies stoking shareholder activism.
- Cross-border M&A making a comeback.
One of the most important factors in achieving a successful M&A transaction is effective integration. Who better to contribute to a successful integration than the company’s “people” people?
Six of eight key internal factors that can lead to a failed M&A touch on areas related to HR including:
- Execution/Integration Gaps
- Talent Issues at the Target Company
- Not a Well-defined M&A Strategy
- Not Achieving Expected Cost Synergies
- Inadequate/Faulty Due Diligence
- Not Achieving Cultural Alignment
This illustrates how important it is to invite Global Mobility, Relocation and Human Resources to the planning table to participate in the extensive pre-planning discussions that need to occur before the announcement goes public.
While executives leading a merger or takeover may act more optimistically, impacted groups might be insecure about the potential for dramatic change. Forming strong relationships and cross-departmental teams improves M&A dynamics.
Internally, companies must identify key players from the merging entities to create an M&A project team. Because combining the assets of two or more companies involves employees, Global Mobility, Relocation and Human Resources comprise an important segment of an M&A implementation strategy and play critical roles on the transition team, as do Payroll and Accounting.
The first order of business for the M&A project team related to employees includes:
- Establishing Timelines for what can be shared and when.
- Sharing Known Dynamics, such as the number of anticipated relocations, locations affected, the new global footprint, potential group moves.
- Determining Budgets to contain costs of known dynamics.
- Identifying required Outside Resources, such as the relocation management company.
- Generating New Policies to retain critical talent.
Once the basics have been established and a general statement of work has been considered, it is time to arrange a confidential meeting with the relocation management company. Because every M&A has its own unique signature, what you did in the past may not fit the current situation.
Relocation management companies like NEI have vast experiences in helping numerous companies navigate the complexities of M&A integrations related to global mobility and can be a time and cost saving advocate for planning a successful M&A.
Addressing Cultural Differences
Action Step Two
According to Aon Hewitt, 58 percent of companies reported they did not have a specific approach to assessing and integrating company culture in a deal.
A Willis Towers study of 190 CEOs, CFOs and top executives on global acquisitions found that cultural incompatibility is rated consistently as the greatest barrier to a successful integration. Unfortunately, it also found that due diligence on corporate cultures was negligible.
An assessment between key groups is often used to appreciate the differences. Understanding work style, protocol, etiquette, decision-making, and more is critically important in developing the organization’s new culture in a manner that helps everyone feel like a valued participant.
With the forecasted uptick in cross-border M&A activity and since cultural alignment is a major factor in a successful M&A, consider investing in cultural training for all stakeholders, including the HR and Global Mobility/ Relocation teams that may work together.
“Truly global companies around the world are securing supply chains and acquiring companies internationally to do so. We should expect even more cross-border volumes across borders and regions for the foreseeable future.”
Mollie Ivancic, VP of International Services, NEI Global Relocation
Merging Cultures
NEI Thriving Example #1
When a North American firm was acquired by an overseas conglomerate, both relocation departments entered the process knowing there needed to be much planning, collaboration, and integration of teams to maintain a return on investment and a seamless transition.
NEI recommended intercultural and communications training for all groups working on or affected by the transition and provided additional area orientation support and integration planning for those who would relocate. This was a crucial step for members of the acquiring company’s overseas management team who were coming to live and work in North America where they would present a different culture and management style to the new workforce.
The company also used the resources of the foreign country’s local embassy and engaged their ambassador to speak about cultural customs and business protocols of the acquiring company’s country to key operational staff in the United States who would be working with new, high-level managers.
Assessing Global Mobility Needs and Implementing New Strategies
Action Step Three
“A partner like NEI – experienced to recognize the opportunities – is crucial to the successful integration of talent agility, relocation and global mobility within the newly- formed company.”
Michelle Moore CPA, MPA, CGMA, Chief Global Mobility Officer , NEI Global Relocation
Each M&A integration approach is different and tailored to the situation or even an outcome desired by senior management.
For instance, during clear “buyout” situations, leaders from both companies may publicly rename the takeover as a “merger” or a “synergy” to diminish the potential of employee anxiety and improve cross-organization collaboration. It is often assumed that the acquiring company’s policies will supersede the program of the company being acquired, but no hard and fast rules exist.
Group Moves within a new company are a common biproduct of M&A activity. Experiencing and managing a group move is one of the more challenging tasks a relocation manager and company can face. It typically involves targeted new policies, a very customized local approach, communication strategies, multiple meetings, support functions and ongoing collaboration.
Throughout our history, NEI has managed many group moves for our clients ranging from groups of five to 800 transferring employees/families across numerous industries and global locations. Through our experience, we know how to identify success elements to retain key employees, present the big picture, guide affected employees and manage the entire process proactively. We have found that a strategy does not have to be expensive or elaborate to succeed.
Many Global Mobility, Relocation and Human Resource departments that have experienced M&A events discover that it is also an opportune time to not only customize group move benefits, but also make desired changes to the overall relocation program. The timing of the M&A provides the additional leverage needed to obtain senior management agreement and support.
Trust is Earned, Not Given
NEI Thriving Example #2
In the merger of two mega-conglomerate companies, NEI took the lead in successfully analyzing and integrating the two companies’ relocation benefits and policies into a comprehensive new program. The client specifically sought NEI’s expertise in offering creative solutions, presenting the agreed upon approach to impacted employees, and helping to relocate the combined company’s new headquarters to a new site.
Newly combined companies often consult with NEI to conduct an objective, detailed analysis and compare both companies’ policies against current best practices and the client’s industry peers. After the policy comparison, merging companies often choose to move forward with NEI’s policy suggestions because of the focus on cost effectiveness and NEI’s record of delivering high employee satisfaction.
Once finalized, NEI presents its findings at a kick-off implementation meeting involving all key stakeholders. This is an excellent time to cover new program improvements and procedures while ensuring everyone involved is on the same page going forward on both tactical and strategic levels.
When the plan is put into action, desired results are monitored, measured, and reported regularly so the program can be adjusted, as necessary.
Not long after the positive conclusion of this large project, the client merged, yet again, with another rival. NEI helped manage the resulting union of the relocation programs and all transferee/assignee activity continued as a seamless execution of the ongoing program. Communication, collaboration, and a consultative approach helped make both mergers a great success.
Managing Expectations and Working Through Differences
Action Step Four:
Working through differences is not limited to companies combining work groups from different countries or regions of the world –internal company cultures can often be diametrically different.
NEI has helped the M&A of many companies with polarly opposite and well-entrenched, corporate cultures offering vastly different relocation benefits.
One company may provide very generous benefits, while the other very lean. If not carefully managed, a situation like this can lead to dissatisfaction and bitterness, depending on new corporate objectives.
“Understanding” Helps Us Accept Change
NEI Thriving Example #3
Quickly integrating the relocation programs of two merging companies was complicated enough, but members of a small division of the purchased company were disappointed about adhering to a new policy, much different than the more generous, exception-friendly benefits to which they had been accustomed.
NEI effectively helped the two sides by using a collaborative and consultative approach to compare relocation programs against company announced objectives. An enhanced benefits policy grid for the merged companies helped NEI present the findings and discuss why the proposed solution was important to meet company objectives.
Once each division understood the reasoning behind the proposed changes, they moved forward as one, overcoming a potential “relocation roadblock” for the new corporate culture.
Effecting a Calm Transition
Action Step Five
Employees in the process of moving are already stressed about relocating and new responsibilities. It is natural to become even more anxious when caught in the middle of a merger or acquisition announcement. Equally concerning are evolving internal processes and ensuring that everyone is on the same page.
Consistency is critical for benefits and processes to be carefully analyzed and clearly documented so details can be communicated to all without a need for later changes. This includes documenting processes for financial capture, tracking and reporting accuracy.
Taking the time to do it right the first time and preparing consistent documentation ensures that relocating employees and stakeholders will understand and correctly follow any new processes.
"Consistency is critical for communications and documentation uniformity."
Looking at the big picture and analyzing the impact of a M&A on various work groups is also important to foster a calm transition. In the following example NEI uncovered a source of great internal anxiety related to new processes and increased workload.
By understanding the situation and listening to concerns, NEI was able to create an innovative solution that saved an enormous amount of time and removed a great deal of anxiety.
Work Smarter, Not Harder
NEI Thriving Example #4
For an NEI client, one of the company’s relocation groups experienced a stressful period each year as they had to work extensive hours for a week over the holidays to complete the year-end “true-up” process. They had major concerns about how this would be accomplished with the combined entity and double the employees.
Concerns about the level of staffing, which was not increasing, were also raised – not to mention recognizing that this entire group of employees would be forced to work through the holidays while the rest of the company’s employees would be enjoying their time off.
NEI’s Chief Financial Officer met with all stake holders involved and proposed a new accounting process to run tax gross-up calculations more often and interface them electronically, since NEI was also managing Expense Tracking. This eliminated the need for the time-intensive true-up process at year-end because NEI would be reconciling for the company through out the year. The new process handled the task with ease, requiring less time and labor to accomplish a greatly increased workload.
As a result, the client’s team did not need to work that busy holiday week ever again – even with their company size doubling – which was much appreciated by everyone at the company!
Finding Catalysts for Bold New Strategies
COVID-19 forced many organizations to step out of their comfort zones and make changes they would have previously resisted without the situation’s dire urgency, such as Work from Home, virtual meetings, working while social distancing, and more.
M&A announcements produce their own daunting challenges, but just as COVID-19 forced companies to act, a M&A event can also serve as a catalyst to implement bold strategies tailored to a new and greater company mission and vision including:
- eliminating process bottlenecks
- improving customer service
- addressing policy/benefit shortcomings
- demonstrating the HR/Global Mobility/Relocation group’s value as proactive consultants and
- leaders creating a more competitive company to increase profitability and grow market share.
NEI has found M&A situations excellent opportunities to help introduce progressive changes or savings measures for which a client had expressed interest or intended to make, but may not have had the internal support to implement previously.
What’s Next?
The business world is operating in a swiftly evolving and very fluid environment; one in which certain trends are starting to appear, including a strong forecast for corporate amalgamations. M&A continue to bean important growth driver and a coordinated approach to integration is critical.
Simply put, taking early and deliberate steps can help foster a smooth transition.
NEI has mastered the key elements of successful M&A integration for relocation and has a passion for working with client leaders to solve business challenges that benefits everyone.
Please contact NEI to learn more about how we can help your company, whether an M&A is in your future or not. Our global expertise and consulting services are available to help your company thrive in today’s challenging world of workforce mobility.
Thriving During Mergers and Acquisitions
Day-to-day business can be challenging on its own, but when Mergers and Acquisitions (M&A) are in the works, things can become especially interesting.
M&A activity is on track for another strong year, so questions Global Mobility, Relocation and Human Resource departments should be asking right now are:
“Are we ready for a fluid and potentially aggressive M&A environment?” and“ Where do we start when we learn about a merger or acquisition that impacts our business?”
Awareness and Preparation Are Key
Benjamin Franklin wisely said,
“By failing to prepare, you are preparing to fail.”
Based on NEI Global Relocation’s (NEI) experience with M&A transitions, five key Action Steps that impact the successful integration of companies have been identified:
- Ensuring Key Stakeholders are at the Planning Table
- Addressing Cultural Differences
- Assessing Global Mobility Needs and Implementing New Strategies
- Managing Expectations and Working through Differences
- Effecting a Calm Transition
These elements may feel as though they are occurring simultaneously, but NEI’s expertise with M&A can guide you through each Action Step to skillfully embrace the vital components necessary for you to thrive, rather than just survive.
Given the potential for increased M&A activity, awareness of these steps can help Global Mobility, Relocation and HR professionals play a more strategic role should your company head in that direction.
After all – when the M&A ink is dry and the lawyers and investment bankers leave the scene, confusion often reigns for those who are not primed for the challenge. Even normal daily decisions of the past can prove problematic in the new and merging environment.
Ensuring Key Stakeholders Are at the Planning Table
Action Step One
Morgan Stanley’s ”M&A Trends Outlook” report confirms that deal-making is likely to accelerate going forward and factors cited as most likely to drive future activity include:
- Well-capitalized companies making acquisitions in their core businesses.
- Financial sponsors, which are holding record amounts of capital, deploying it in acquisitions.
- Uneven performance among companies stoking shareholder activism.
- Cross-border M&A making a comeback.
One of the most important factors in achieving a successful M&A transaction is effective integration. Who better to contribute to a successful integration than the company’s “people” people?
Six of eight key internal factors that can lead to a failed M&A touch on areas related to HR including:
- Execution/Integration Gaps
- Talent Issues at the Target Company
- Not a Well-defined M&A Strategy
- Not Achieving Expected Cost Synergies
- Inadequate/Faulty Due Diligence
- Not Achieving Cultural Alignment
This illustrates how important it is to invite Global Mobility, Relocation and Human Resources to the planning table to participate in the extensive pre-planning discussions that need to occur before the announcement goes public.
While executives leading a merger or takeover may act more optimistically, impacted groups might be insecure about the potential for dramatic change. Forming strong relationships and cross-departmental teams improves M&A dynamics.
Internally, companies must identify key players from the merging entities to create an M&A project team. Because combining the assets of two or more companies involves employees, Global Mobility, Relocation and Human Resources comprise an important segment of an M&A implementation strategy and play critical roles on the transition team, as do Payroll and Accounting.
The first order of business for the M&A project team related to employees includes:
- Establishing Timelines for what can be shared and when.
- Sharing Known Dynamics, such as the number of anticipated relocations, locations affected, the new global footprint, potential group moves.
- Determining Budgets to contain costs of known dynamics.
- Identifying required Outside Resources, such as the relocation management company.
- Generating New Policies to retain critical talent.
Once the basics have been established and a general statement of work has been considered, it is time to arrange a confidential meeting with the relocation management company. Because every M&A has its own unique signature, what you did in the past may not fit the current situation.
Relocation management companies like NEI have vast experiences in helping numerous companies navigate the complexities of M&A integrations related to global mobility and can be a time and cost saving advocate for planning a successful M&A.
Addressing Cultural Differences
Action Step Two
According to Aon Hewitt, 58 percent of companies reported they did not have a specific approach to assessing and integrating company culture in a deal.
A Willis Towers study of 190 CEOs, CFOs and top executives on global acquisitions found that cultural incompatibility is rated consistently as the greatest barrier to a successful integration. Unfortunately, it also found that due diligence on corporate cultures was negligible.
An assessment between key groups is often used to appreciate the differences. Understanding work style, protocol, etiquette, decision-making, and more is critically important in developing the organization’s new culture in a manner that helps everyone feel like a valued participant.
With the forecasted uptick in cross-border M&A activity and since cultural alignment is a major factor in a successful M&A, consider investing in cultural training for all stakeholders, including the HR and Global Mobility/ Relocation teams that may work together.
“Truly global companies around the world are securing supply chains and acquiring companies internationally to do so. We should expect even more cross-border volumes across borders and regions for the foreseeable future.”
Mollie Ivancic, VP of International Services, NEI Global Relocation
Merging Cultures
NEI Thriving Example #1
When a North American firm was acquired by an overseas conglomerate, both relocation departments entered the process knowing there needed to be much planning, collaboration, and integration of teams to maintain a return on investment and a seamless transition.
NEI recommended intercultural and communications training for all groups working on or affected by the transition and provided additional area orientation support and integration planning for those who would relocate. This was a crucial step for members of the acquiring company’s overseas management team who were coming to live and work in North America where they would present a different culture and management style to the new workforce.
The company also used the resources of the foreign country’s local embassy and engaged their ambassador to speak about cultural customs and business protocols of the acquiring company’s country to key operational staff in the United States who would be working with new, high-level managers.
Assessing Global Mobility Needs and Implementing New Strategies
Action Step Three
“A partner like NEI – experienced to recognize the opportunities – is crucial to the successful integration of talent agility, relocation and global mobility within the newly- formed company.”
Michelle Moore CPA, MPA, CGMA, Chief Global Mobility Officer , NEI Global Relocation
Each M&A integration approach is different and tailored to the situation or even an outcome desired by senior management.
For instance, during clear “buyout” situations, leaders from both companies may publicly rename the takeover as a “merger” or a “synergy” to diminish the potential of employee anxiety and improve cross-organization collaboration. It is often assumed that the acquiring company’s policies will supersede the program of the company being acquired, but no hard and fast rules exist.
Group Moves within a new company are a common biproduct of M&A activity. Experiencing and managing a group move is one of the more challenging tasks a relocation manager and company can face. It typically involves targeted new policies, a very customized local approach, communication strategies, multiple meetings, support functions and ongoing collaboration.
Throughout our history, NEI has managed many group moves for our clients ranging from groups of five to 800 transferring employees/families across numerous industries and global locations. Through our experience, we know how to identify success elements to retain key employees, present the big picture, guide affected employees and manage the entire process proactively. We have found that a strategy does not have to be expensive or elaborate to succeed.
Many Global Mobility, Relocation and Human Resource departments that have experienced M&A events discover that it is also an opportune time to not only customize group move benefits, but also make desired changes to the overall relocation program. The timing of the M&A provides the additional leverage needed to obtain senior management agreement and support.
Trust is Earned, Not Given
NEI Thriving Example #2
In the merger of two mega-conglomerate companies, NEI took the lead in successfully analyzing and integrating the two companies’ relocation benefits and policies into a comprehensive new program. The client specifically sought NEI’s expertise in offering creative solutions, presenting the agreed upon approach to impacted employees, and helping to relocate the combined company’s new headquarters to a new site.
Newly combined companies often consult with NEI to conduct an objective, detailed analysis and compare both companies’ policies against current best practices and the client’s industry peers. After the policy comparison, merging companies often choose to move forward with NEI’s policy suggestions because of the focus on cost effectiveness and NEI’s record of delivering high employee satisfaction.
Once finalized, NEI presents its findings at a kick-off implementation meeting involving all key stakeholders. This is an excellent time to cover new program improvements and procedures while ensuring everyone involved is on the same page going forward on both tactical and strategic levels.
When the plan is put into action, desired results are monitored, measured, and reported regularly so the program can be adjusted, as necessary.
Not long after the positive conclusion of this large project, the client merged, yet again, with another rival. NEI helped manage the resulting union of the relocation programs and all transferee/assignee activity continued as a seamless execution of the ongoing program. Communication, collaboration, and a consultative approach helped make both mergers a great success.
Managing Expectations and Working Through Differences
Action Step Four:
Working through differences is not limited to companies combining work groups from different countries or regions of the world –internal company cultures can often be diametrically different.
NEI has helped the M&A of many companies with polarly opposite and well-entrenched, corporate cultures offering vastly different relocation benefits.
One company may provide very generous benefits, while the other very lean. If not carefully managed, a situation like this can lead to dissatisfaction and bitterness, depending on new corporate objectives.
“Understanding” Helps Us Accept Change
NEI Thriving Example #3
Quickly integrating the relocation programs of two merging companies was complicated enough, but members of a small division of the purchased company were disappointed about adhering to a new policy, much different than the more generous, exception-friendly benefits to which they had been accustomed.
NEI effectively helped the two sides by using a collaborative and consultative approach to compare relocation programs against company announced objectives. An enhanced benefits policy grid for the merged companies helped NEI present the findings and discuss why the proposed solution was important to meet company objectives.
Once each division understood the reasoning behind the proposed changes, they moved forward as one, overcoming a potential “relocation roadblock” for the new corporate culture.
Effecting a Calm Transition
Action Step Five
Employees in the process of moving are already stressed about relocating and new responsibilities. It is natural to become even more anxious when caught in the middle of a merger or acquisition announcement. Equally concerning are evolving internal processes and ensuring that everyone is on the same page.
Consistency is critical for benefits and processes to be carefully analyzed and clearly documented so details can be communicated to all without a need for later changes. This includes documenting processes for financial capture, tracking and reporting accuracy.
Taking the time to do it right the first time and preparing consistent documentation ensures that relocating employees and stakeholders will understand and correctly follow any new processes.
"Consistency is critical for communications and documentation uniformity."
Looking at the big picture and analyzing the impact of a M&A on various work groups is also important to foster a calm transition. In the following example NEI uncovered a source of great internal anxiety related to new processes and increased workload.
By understanding the situation and listening to concerns, NEI was able to create an innovative solution that saved an enormous amount of time and removed a great deal of anxiety.
Work Smarter, Not Harder
NEI Thriving Example #4
For an NEI client, one of the company’s relocation groups experienced a stressful period each year as they had to work extensive hours for a week over the holidays to complete the year-end “true-up” process. They had major concerns about how this would be accomplished with the combined entity and double the employees.
Concerns about the level of staffing, which was not increasing, were also raised – not to mention recognizing that this entire group of employees would be forced to work through the holidays while the rest of the company’s employees would be enjoying their time off.
NEI’s Chief Financial Officer met with all stake holders involved and proposed a new accounting process to run tax gross-up calculations more often and interface them electronically, since NEI was also managing Expense Tracking. This eliminated the need for the time-intensive true-up process at year-end because NEI would be reconciling for the company through out the year. The new process handled the task with ease, requiring less time and labor to accomplish a greatly increased workload.
As a result, the client’s team did not need to work that busy holiday week ever again – even with their company size doubling – which was much appreciated by everyone at the company!
Finding Catalysts for Bold New Strategies
COVID-19 forced many organizations to step out of their comfort zones and make changes they would have previously resisted without the situation’s dire urgency, such as Work from Home, virtual meetings, working while social distancing, and more.
M&A announcements produce their own daunting challenges, but just as COVID-19 forced companies to act, a M&A event can also serve as a catalyst to implement bold strategies tailored to a new and greater company mission and vision including:
- eliminating process bottlenecks
- improving customer service
- addressing policy/benefit shortcomings
- demonstrating the HR/Global Mobility/Relocation group’s value as proactive consultants and
- leaders creating a more competitive company to increase profitability and grow market share.
NEI has found M&A situations excellent opportunities to help introduce progressive changes or savings measures for which a client had expressed interest or intended to make, but may not have had the internal support to implement previously.
What’s Next?
The business world is operating in a swiftly evolving and very fluid environment; one in which certain trends are starting to appear, including a strong forecast for corporate amalgamations. M&A continue to bean important growth driver and a coordinated approach to integration is critical.
Simply put, taking early and deliberate steps can help foster a smooth transition.
NEI has mastered the key elements of successful M&A integration for relocation and has a passion for working with client leaders to solve business challenges that benefits everyone.
Please contact NEI to learn more about how we can help your company, whether an M&A is in your future or not. Our global expertise and consulting services are available to help your company thrive in today’s challenging world of workforce mobility.
