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Managing the Merger & Retaining People-Based Economic Value

Managing the Merger & Retaining People-Based Economic Value. Patrick Donohue National Lead Partner Human Capital M&A Services Deloitte & Touche. Priorities and Strategies in Managing a Merger. Speed and Simplicity. Minimize Disruption. Optimal Cost. Strategic Fit. 1. Minimize Disruption.

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Managing the Merger & Retaining People-Based Economic Value

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  1. Managing the Merger &Retaining People-Based Economic Value Patrick Donohue National Lead Partner Human Capital M&A Services Deloitte & Touche

  2. Priorities and Strategies in Managing a Merger Speed and Simplicity Minimize Disruption Optimal Cost Strategic Fit

  3. 1. Minimize Disruption 2. Speed and Simplicity 3. Optimal Cost 4. Strategic Fit Priorities and Strategies in Managing a Merger Day One On Going Operations 1. Optimal Cost 2. Strategic Fit 3. Speed and Simplicity 4. Minimize Disruption

  4. Infrastructure Strategy Alternatives • Absorb Bringing the target into the new parent • Advantages: The “Obvious Choice”, simple and direct, demands little executive time • Disadvantages: “Conquering Army” approach, reduced value on key assets and people in the acquired company, great strain on parent company resources • Design A New Infrastructure • Advantages: Optimal strategic fit and cost structure. • Disadvantages: May be more disruptive during transition and add time and complexity to the launch of the new organization. • “Clone & Go” • Duplicating the infrastructure of the target • Advantages: It works, its quick, and can minimize disruption. Can be an effective temporary strategy. • Disadvantages: The adopted model likely to be a poor fit for a smaller, younger organization.

  5. Especially During a MergerPay Alone Will Not Keep People Trust Fair Market Compensation Total The Job Rewards Strategy Wealth Accumulation Career & Growth Opportunity

  6. Retention of People-Based Economic Value Starts with the Business Case of the Merger • Capitalize on Economies of Scale • Reduce overhead • Eliminate redundancies • Access markets • Leverage Core Business • Forward integration • Backward integration • Acquire substitute product • Grab market share • Transfer Skills/Technologies • Acquire distribution channel • Make a bet on new technology • Invest in new product line

  7. Start With the Business Case (continued) Degree of Intellectual Extent of Capital Transfer Retention Effort Moderate Focused High Broad Very High Extensive • Capitalize on Economies of Scale • Leverage Core Business • Transfer Skills/Technologies

  8. Assets Sample Retention Targets • Group Head • Key Technical Contributor • Human Resource Director • Human Capital • Leadership • Expertise • Culture • Structural Capital • Process Efficiency • Database/Knowledge Base • Network/Alliances • Process Owner/Case Manager • CIO/IT Professional • VP, Business Development • Account Manager • Marketing Manager • Sales Rep • Key Accounts • Brand Equity • Customer Capital Where is the Intellectual Capital?

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