Human capital risk in mergers and acquisitions

Minority of senior finance executives characterized their recent M&A as a true 
winner 
TORONTO, Jan. 23, 2013 /CNW/ - Only one out of five finance executives who 
have been involved in mergers or acquisitions during the past five years say 
their transactions were very successful. However, according to Human Capital 
Risk in Mergers and Acquisitions, a study conducted by the Canadian Financial 
Executives Research Foundation (CFERF) and sponsored by Towers Watson, 
executives are not deterred from future attempts at mergers and acquisitions 
(M&As). The vast majority (more than 80%) of survey participants said they 
were at least somewhat likely to do another M&A in the next 24 months. 
This study aimed to pinpoint and highlight what the highly successful 
companies did differently in their M&As from a human capital standpoint. The 
research found that most companies with a recent history of "very successful" 
transactions shared a set of specific strategies that were different from 
other respondents. 
"Human capital risk stands out as a critical area for the success of an M&A, 
and, as such, requires management's attention as soon as an organization 
enters into discussions with another entity," said Michael Conway, Chief 
Executive and National President, FEI Canada. "Our research also shows that 
companies that very successfully completed an M&A all paid unwavering 
attention to human capital at all stages of the process, while this was not 
the case for less successful transactions." 
CFERF, the research arm of FEI Canada, conducted the survey of financial 
executives across Canada and gathered insights from a research forum held in 
Toronto. The study's findings highlight the perspectives of CFOs and other 
senior finance executives on human capital risk in M&As. 
Survey respondents indicated that they determined the success of their 
transactions by measuring different metrics. 


    --  69% of respondents measured revenue growth;
    --  63% of respondents measured achievement of specific synergies
        other than cost reduction; and
    --  45% of respondents measured retention of key talent.

From the results of this study, it appears that the companies which were most 
diligent about identifying people and cultural issues to address early in the 
M&A process, well before the integration stage, were best positioned for a 
successful M&A. It is clear that an early assessment of key factors must be 
undertaken during the due diligence stage, not when the deal closes.

"In order to effectively manage a cultural integration, organizations should 
upgrade their toolkit before the next deal" said Eric D'Amours, Account 
Director & Canada Leader, Mergers & Acquisitions, Towers Watson. "When the 
next transaction comes up, they would then be better prepared to prioritize 
issues to be addressed as part of the due diligence process, including plans 
to help employees cope with the upcoming change."

According to this study, companies with a history of greatest success in M&As 
used specific processes and governance policies at all phases of the M&A 
process from due diligence to implementation. This approach allowed them to 
retain key talent and improve both employee moral and productivity.

Please click here to view the full report.

The Canadian Financial Executives Research Foundation (CFERF) is the 
non-profit research institute of Financial Executives International Canada 
(FEI Canada). The foundation's mandate is to advance the profession and 
practices of financial management through research. CFERF undertakes objective 
research projects relevant to the needs of FEI Canada's 1,800 members in 
working toward the advancement of corporate efficiency in Canada. Further 
information can be found at www.feicanada.org.

Financial Executives International Canada (FEI Canada) is the all industry 
professional membership association for senior financial executives. With 
eleven chapters across Canada and more than 1,800 members, FEI Canada provides 
professional development, thought leadership and advocacy services to its 
members. The association membership, which consists of Chief Financial 
Officers, Audit Committee Directors and senior executives in the Finance, 
Controller, Treasury and Taxation functions, represents a significant number 
of Canada's leading and most influential corporations. Further information 
can be found at www.feicanada.org.

Towers Watson

Towers Watson is a leading global professional services company that helps 
organizations improve performance through effective people, risk and financial 
management. With 14,000 associates around the world, we offer solutions in the 
areas of benefits, talent management, rewards, and risk and capital management.

Christian Bellavance, VP Research and Communications FEI Canada/CFERF 
cbellavance@feicanada.org 416-366-3007, ext. 5114  Eric D'Amours Account 
Director & Canada Leader, Mergers & Acquisitions Towers Watson 
eric.d'amours@towerswatson.com 416-960-4493  Sherry Boisvert 416-355-7418 
Sherry.Boisvert@ketchum.com  Stacey Grimshaw 416-355-7426 
Stacey.Grimshaw@ketchum.com

SOURCE: Towers Watson

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CO: Towers Watson
ST: Ontario
NI: FIN ECOSURV 

-0- Jan/23/2013 13:00 GMT


 
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