Leadership assessments in mergers and acquisitions
Managing talent risk
Mercer research shows that People issues are the most common reason why deals fail to deliver the expected value.
M&A due diligence focuses mainly on auditing business financials to predict future performance. But to drive growth and change in today’s environment, corporate and private equity teams must also assess the human capital side of the deal.
We provide insights to deal teams in three areas:
- 1 Leadership
- 2 Culture
- 3 Workforce
- What are the strengths of the executive team and individual leaders? What are potential barriers to delivering growth?
- What leadership dynamics can hinder success?
- Who is critical to retain?
- Who is best positioned to take on new/expanded responsibilities?
- What is the organizational culture of the target? What’s it really like to work there?
- How are decisions made, and conflict managed?
- What is the talent flow of the target, and how do they attract & retain talent?
- What is the skillset of the workforce? What are the top skills versus competitors?
- Who is critical talent to retain for the next phase of growth?
- What is the health of the talent practices to scale and sustain growth?
70% of deals fail to deliver due to people and organizational issues.
Pre-deal: Aligning leadership to deal value
Too often, the process of evaluating leaders’ deal readiness and ability to deliver results falls short of the rigor it demands. Leadership is a material risk in deals; assessing leadership needs early in the deal lifecycle has significant impact on return.
Nearly 50% of CEOs in mid-market deals have gaps in capabilities necessary to grow the business, and 70% don’t make it through the deal lifecycle. Research shows that organizations that change CEOs in Year 1 perform better than those making changes in later years.
If aligning leadership to value creation is so critical, why does only one CEO in seven undergo an objective assessment process as part of a deal? The use of assessment at lower levels is even less common, and arguably even more critical.
Our leadership alignment model reflects the five paradoxes that today’s leaders must navigate:
M&A is often a time of complexity and ambiguity, during which leaders are required to navigate new policies, bureaucracy, and team dynamics while still delivering results and achieving growth targets.
The critical drivers of success during this time are what we refer to as Paradoxical Leadership – a leadership style that asks executives to adopt contradictory but interconnected behaviors to satisfy the needs of a complex stakeholder environment and changing strategic landscape.
Mercer’s leadership assessment provides deal teams with a measure of Paradoxical Leadership, either during due diligence or after the deal is closed.
Post-deal: The first 100 days
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Identify critical roles and top talent
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Assess their leadership bench strength
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Conduct snapshot assessments using validated psychometrics
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Understand leadership team dynamics
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Deep dive into areas of leadership misalignment
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Ensure individual and team readiness through coaching that resolves pain points and creates cohesion in the critical early days of a deal
Mercer helps deal teams use assessment data to anticipate implications and risks of the leadership and workforce misalignment and suggest corrective action before it impacts the deal.
Thanks to our global scale and local footprint, Mercer has the business acumen, deal experience and people expertise to address your toughest people challenges — we can work anywhere in the world and act at a moment’s notice.
The diversity of our clients — in terms of size, maturity, industry sector and geographic location — means we can collaborate with all types of organizations to successfully achieve deal objectives.
We’re People experts – let us proactively manage the leadership and workforce aspects of your deal with the same rigor as all other strategic elements.