This document summarizes a presentation by Kristian Andersson on effective human resource practices in mergers and acquisitions. The presentation discusses how HR issues are a common explanation for why many M&As fail to realize expected results. It then explores how HR practices could positively impact M&A performance if HR gets involved earlier, understands the underlying strategy, decides on an integration structure, aligns practices to the strategy and structure, and builds long-term M&A capabilities. The presentation also provides recommendations for HR based on case studies and emphasizes the importance of communication, planning for objectives, and minimizing value leakage.

1. EFFECTIVE HUMAN RESOURCE PRACTICES IN
MERGERS AND ACQUISITIONS
Kristian Andersson
PAUSE Network Göteborg
November 24, 2009

2. Agenda
• Introduction - Kristian and why the topic is relevant
• Theory - M&A and value creation
• Cases - Overview
• Recommendations & learnings from cases
• Key takeaways
• Discussion
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3. Kristian Andersson - Bio
Visiting Scholar
Director HR Strategy (acting) | Management Consultant
Department Management Cardiothoracic Surgery
SAHLGRENSKA UNIVERSITY HOSPITAL
Management Consultant
M.Sc. Financial Economics | Psychology
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4. Effective Human Resource Practices In
Mergers And Acquisitions
So what?
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5. M&As Are Popular Means of Growth
THE BAD NEWS IS: IN A RECENT ACQUISITION FRENZY, WE PURCHASED ONE OF
OUR OWN COMPANIES.
THE GOOD NEWS IS: THE STOCK WENT UP.
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6. M&A Activity - Low / High
• Announced global M&A
volume stands at $1.46 trillion
for the year to date
• Dealmaking is down a
substantial 38% vs. third
quarter 2008 and is the lowest
third quarter figure since 2004
Thomson Financial, Q3, 2009
Dealogic, Q3, 2009
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7. Discouraging M&A Outcomes
• Many M&As fail to realize expected results
30-50% KPMG, Mergerstat, PricewaterhouseCoopers…
57% Mercer
65% BCG
67% Booz Allen
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8. M&As Fail - HR Issues Common Explanation
But HR Issues Are Neglected, Why?
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9. Purpose of Study
• Explore what and how HR practices could have a positive
impact on M&A performance
HR practices = activities broadly related to the management of
people, performed by both the HR function and by other parties
within a company
The effectiveness of HR practices = impact on company
performance (however measured) post-acquisition
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10. Why Buy?
• Consolidate market within geographical area
• Extend or add products, services or technologies
• Enter a new geographic market
• Vertically integrate
• Enter a new line of business
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11. Measures of M&A Performance
Our books are balanced. 50% of our numbers
are real and 50% are made up.
Accounting-based Stock market based
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12. M&A Performance Dimensions
Task level Transaction level Firm level
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13. Determinants of M&A Success
Experience Codifying knowledge
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14. Determinants of M&A Success (Cont’d)
Value from Strategic rationale and type /
synergies level of integration
realization does not happen automatically!
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15. Structure (Level of Integration) Is About Balancing
Positive and Negative Synergies
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16. Approaching Integration of Corporate Cultures
Portfolio Blending New Creation Assimilation
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17. Adapt M&A Approach to Fit Underlying Strategy
Strategic M&A
Structure HR practices
rationale performance
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18. The Cases
• Companies show different degree of sensitivity to the
underlying strategy when deciding on structure & process
• HR tend to be involved too late in the process
More reactive than proactive
• Communication is perceived a major challenge
Lack of clarity amplifies
• None had any systematic approach to learning
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19. Recommendations for HR 1 (4)
• Understand the underlying
strategy and its implications
Decide on structure and
processes
Set and manage expectations
I assumed when we merged that we’d each
have our own desk
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20. Recommendations for HR 2 (4)
• Take lead and plan for realization of acquisition objectives
Create space for risk analysis in the acquisition process
Staff with the best
HR takes the lead!
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21. Recommendations for HR 3 (4)
• Minimize value leakage and
secure the base business
Keep dialogue with employees
Monitor and manage issues
early
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22. Recommendations for HR 4 (4)
• Build long-term M&A capability
Create systematic and fact-based approach
Establish and lead process for learning from M&A experience
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23. Key Takeways for HR
• Get involved early
• There is no one-size-fits-all approach to the management
of HR in M&As
• Be clear on the underlying strategy driving the deal
• Decide on the appropriate structure to support the strategy
• Align HR practices to strategy and structure
• Build long-term M&A capability
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24. +46 702 - 83 5991
Questions?
kristian.andersson@telia.com
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