The HR Perspective (After-all it's all about people) ! : India Inc has announced 100 plus merger and acquisition deals, valued at more than 6 billion dollars, in the first three months of the new calendar year. The most significant M&A deal in the first two months of 2008 has been HDFC Bank's acquisition of Centurion Bank of Punjab followed by a subsequent merger. The M&A scene has received a major boost from the latest Tata Motors acquisition of premium car brands Jaguar and Land Rover from US automobile firm for 2.30 billion dollars. The deal also led to culmination of Ford's decision last August to explore strategic options for the JLR business.

HR has consistently been in the spotlight in relation to mergers and acquisitions (M&As). In fact, HR's contribution can be a make or break success factor. It also provides a high profile opportunity for HR practitioners to demonstrate themselves as a genuine strategic partner.

Marriages Are Not Always Made in Heaven: Don't let anyone tell you that a merger or acquisition is the union or marriage of two sets of employees. Outside of some of the executives, it is more like two mindsets who have never dated, and now are thrown together because of the wishes of stockholders or boards over whom they have had no control.

Let's first get our definitions straight. In a way, mergers and acquisitions are the same especially if you accept the legal definition. Though a merger is usually thought of as a union of two enterprises, the legal definition comes closer to reality: "The absorption of a lesser estate, liability, right, action, or offense into a greater one." And if you're one of the acquirees, it doesn't matter coz you've got 75-25 odds of getting fired anyway. On the other hand, an acquisition is the purchase of an asset or the entire assets of an entire company.

Many reasons abound the success and failure of a ‘corporate marriage'... clash of culture and management styles, challenges of managing change, underestimating the power of diversity influences on managerial behavior, and so on. These are concerns not only confined at Top Management but could more readily be facilitated by HR .

What part could HR play in helping the senior or executive leadership of an organization at leading and managing the aftermath of an M&A. After all, it is one thing to acquire, takeover or merge two different entities and quite another thing to integrate the varied physical, psychological and at best ‘spiritual' dimensions that characterize the new entity, which sets 2a new corporate identity.

Enough prelude, in this article and the following parts; we will be taking a shot at the two great M&A mixers - the Pre-Merger Examination or Audit and the roadblocks to M&A Success:

There are at least three stages in a merger or acquisition:

* The meeting of minds, offers, and initial plan;

*  The financial and other audits, aka due-diligence;

*  And combining the two entities to form a fundamentally cohesive and productive new organization, aka integration.

And there are the five major roadblocks to M&A success, if not all, atleast the last three of which are HR issues:

*  Inability to sustain financial performance

*  Loss of productivity

*  Incompatible cultures

*  Loss of key talent

*  Clash of management styles

Any HR Manager or Executive who understands and balances the above 3 plus 5 points, will really be able to orchestrate and become a real strategic partner in a true sense to any M&A. Having said that, only few of the companies we know believe that their HR execs in the organizations possess the capabilities needed to play a strategic M&A role. So the HR execs need to beef up their competencies to raise, for instance, a HR who says his/her involvement has been in identifying issues/planning due diligence, below are few of my advises among other things for a HR exec to know:

*  Gaining M&A and general business literacy.

*  Developing an ability to contribute to the valuation of another company.

*  Planning and leading complex integration projects.

Next issue: Getting ready for change and more..

Sabarigiri Varadha is a Serial Entrepreneur and VThree Consulting Pvt Ltd happens to be the part of his series. VThree Consulting Pvt Ltd provides MNCs' the most complicated technology in the world... the skilled human beings. Feedback can be mailed to sabarigv@ vthreeconsulting.com

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