Navigating the New M&A Landscape:
A People-First Approach

By Lauren DeMarco, Aston Carter Director of Market Operations

Developing the right merger and acquisition (M&A) strategy is never simple. Combining two complex organizations — each with distinct business processes, goals, company cultures, and team structures — can be an intricate process, one that brings both significant opportunity and potential risk for organizations of all sizes.

Radical market changes over the past two years have only increased these opportunities and risks. Advances in remote work technologies and team structures, for instance, have shifted the way companies do business, prompting many organizations to rethink their M&A strategies.

As economic recovery continues across the nation, industries like health care, technology, retail, and financial services are experiencing a significant increase in merger and acquisition activity. In fact, M&A sprees have totaled more than $1.8 trillion so far in 2021, signaling what could be the busiest year on record for U.S. banks. Organizations everywhere are therefore recognizing the need for scalable business models to spur continuous growth and facilitate change management.

Of course, every organization is different, and there is no one-size-fits-all solution for M&A success. However, there is a clear approach that will help ensure an effective M&A process: putting people first.

Turning Talent Retention Challenges into M&A Staffing Opportunities

In many sectors, advances within the M&A landscape have brought a new set of challenges beyond the usual logistics of business integration and change management.

Among these challenges is a significant shortage of skilled labor. Given the tight labor market, retaining talent should be a top priority of every organization as it moves into post-merger integration. Key skill sets are in high demand, and organizations everywhere are rethinking their approach to recruitment and talent retention, which includes reevaluating employee value propositions and even bolstering compensation and benefits packages to attract and retain workers.



So how can organizations create a sustainable advantage and ensure post-merger integration success in this highly competitive atmosphere?

Many businesses are opening up M&A talent searches to allow for remote work. This approach allows organizations in smaller markets to tap into previously inaccessible talent pools. Of course, as more companies start taking advantage of remote work capabilities, this advantage will level out over time.

For organizations looking to establish a longer-term advantage, creating and communicating a clear M&A staffing strategy could mean the difference between maintaining your current workforce and losing talent to the competition at a critical moment in the M&A process.

It is important to keep in mind that M&A initiatives inevitably bring uncertainty for both businesses and employees. By taking a people-first approach that addresses employees, concerns with detailed staffing support and integration plans, organizations can alleviate employee anxieties and workloads, providing a critical talent retention advantage.

Key Questions for Creating a People-First M&A Staffing Strategy

Across all business sectors, the first step in creating a people-first M&A staffing strategy is identifying the areas of your organization that are essential to both ongoing business continuity and future financial growth.

It's also important to consider whether the two companies are running on separate enterprise resource planning (ERP) systems. If accounting and business systems are different, you'll want to determine whether you should run dual systems for a period of time or focus on integrating systems first. In either case, once the two companies are merged, it's essential to ensure the systems are talking. Seamless integration means increased efficiency and reduced frustration from employees having to divide their time and resources between two systems.

Next, it's essential to integrate organizational structures without disrupting your current workforce and business operations. When determining how to best supplement and support current employees in the face of additional M&A objectives, be sure to consider the following:

• Should you keep your full-time employees focused on the day-to-day business initiatives and assign managers to focus on the integration?
• Is it better to supplement your current staff with generalists or bring in specialized skill sets at different points in the post-merger integration process?

To ensure your workforce is aligned to business requirements, it's important to assess the skills of your existing workers before embarking upon M&A activities. Typically, organizations realize they'll need more technical skill sets to succeed. In those instances, bringing on consultants or contract-to-hire employees can provide a valuable layer of support. A staffing or consulting firm can further help with the process by ensuring specialized employees are in place for each phase of the integration while maintaining employee retention across core areas of the business.

Planning Your People-First M&A Staffing Strategy

Planning and implementing the right staffing and talent management strategy early in the M&A process is essential. It improves talent retention by bolstering support for full-time employees and helps ensure smoother integration of business processes, cultures, and structures. Perhaps most importantly, it creates consistent communication around high-level expectations and individual performance management, alleviating some of the uncertainty brought on by major organizational changes.

So when it comes to the M&A timeline, it's never too early to start planning your approach to staffing and talent management. The application of a people-first strategy should begin at first disclosure and continue well beyond final business integration.

If you're considering working with an experienced staffing or consulting firm to help navigate M&A challenges, building a relationship early in the process, or even before it's begun, can be extremely beneficial. A knowledgeable partner can help:

• Clarify staffing requirements as you look to identify or conduct due diligence investigations into potential acquisition targets.
• Formulate the right staffing and talent retention strategies for the most critical areas of your business.
• Anticipate and answer staffing and talent management questions before they arise.

Whether you choose to coordinate your M&A staffing needs internally or with an outside partner, it's important to keep the rapidly shifting and evolving M&A landscape in mind. Creating a flexible and scalable strategy that adapts to the needs of your people, as well as your evolving business goals, is essential. To learn about how Aston Carter can help address your talent goals during your M&A, contact us.

This article was originally featured in HR Daily Advisor.