People-related issues key to successful cross-border M&A, Mercer survey shows

Hong Kong, July 27, 2012 

Failure to address “people-centric” issues appropriately can jeopardize the overall success of a cross-border M&A deal, according to the results of Mercer’s 2012 Asia Pacific Cross-Border Post-Merger Integration Survey.

Forty-one companies across Asia Pacific that had recently acquired a new overseas-based business were interviewed by Mercer. Only 24% of the respondents cited sale price as a critical success factor for their M&A. The majority (76%) said that business and organization integration was the most important success factor, followed by talent retention (59%), pointing to a strong emphasis on people-related issues.

Significantly, almost 60% of respondents identified culture as a top key challenge during integration, but most companies’ integration plans lack the right kind of detail. Working with HR on a robust integration plan prior to deal-close is vital, and means that critical people-related details are properly addressed and managed.

"Planning and execution around critical areas such as talent management, executive rewards, governance and organizational culture are essential during all stages of transactions," said Len Gray, Mercer’s Global & Asia-Pacific M&A leader. “The experiences of our survey respondents indicate that engaging HR professionals from the outset helps protect against unanticipated people issues arising during integration.”

The survey indicated that 66% of companies see executive compensation and benefits as their primary focus during HR due diligence. However, many companies do not have a clear strategy for managing differing executive reward schemes. Handling discrepancies between pay packages on a case-by-case basis can lead to prolonged and costly negotiations.

Further, the majority of respondents (61%) viewed governance of the acquired company as the second most important initiative during integration. Strategies reported range from taking majority board seats and appointing key executives, to leaving the new company in the experienced hands of its existing leadership. Either way, organizational governance is seen as a key consideration when mergers span borders.

The report also found that a culture integration strategy will not fly without the buy-in of senior leaders. Any successful plan needs to be developed, owned and driven by these key influencers. One powerful integration strategy related during the survey was to bring the leadership team of the target company into the headquarters of the acquiring company to gain alignment on key integration issues and get the assimilation process off to a healthy start.

About the Survey
The Asia Pacific Cross-Border Post-Merger Integration Survey is an inaugural survey.  Human Resource Directors, Business Development and Corporate Strategy Executives from forty-one multinational and large local companies across a wide range of industries (retail, energy, food and beverage, financial services, engineering and technology) participated.  Interviews were conducted on a one-to-one basis with twenty questions.

About Mercer
Mercer is a global leader in human resource consulting and related services. The firm works with clients to solve their most complex human capital issues by designing and helping manage health, retirement and other benefits. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights

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マーサー ジャパン リンク
Mercer (Global) リンク

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マーサー ジャパン株式会社
小原 香恋 Karen Ohara
Tel: 03-5354-1674 pr.japan@mercer.com