As a business owner or executive contemplating a merger or acquisition, you want to ensure this upcoming transaction will be beneficial for your organization. Performing due diligence to validate the company’s performance and the asking price is a critical step for those preparing for such a large transaction.
Due diligence involves looking into the company’s day-to-day operations, its financial circumstances and its organizational systems. Sometimes, those engaged in due diligence prior to a large business transaction fail to look into one of the biggest sources of company success and vulnerability.
Specifically, they fail to look into the talent at the other organization. What do you need to know about a company’s workforce before making an offer or completing a transaction?
Identify key players at the organization
The entire company may rely on the leadership of the current CFO, or its organizational success may be a reflection of its engineering innovations, rather than the behavior of company executives. Acquiring or merging with a company frequently leads to numerous employees at the organization leaving for different employment opportunities. If you identify key talent beforehand, you can negotiate to retain as many of those workers as possible.
Evaluate your liability exposure
A worker’s performance at the company is only one consideration. Someone’s overall behavior and personality can also be a concern, especially if they are in an executive or managerial position.
Looking at human resources records and trying to evaluate if there are problematic employees, such as sales lead who flirtatiously touches their teammates, could help you identify those that you will need to retrain or transition out of the company. It can also help you spot potential upcoming litigation that might make the transaction less beneficial.
Determine what you need to offer
How a company treats its employees will change over time, especially when ownership or leadership at the company changes. From reinstituting annual cost-of-living wage increases because the current organization does not offer them to identifying unusual benefit offerings that may increase what it cost to keep people working for the company, it will be crucial for you to figure out what your workers currently receive for their services and what you will need to provide to keep the top talents happy in their relationship with your company.
Expanding your concept of due diligence can make it easier for you to make the right decisions when looking into a merger or acquisition transaction.
