The big problem with saying that an acquisition is a merger of equals is that management can delay recognition of the company that is the cultural acquirer, making human due diligence virtually impossible before the transaction. Before you can assess potential personal problems, you need to know which culture you want to end up with. Who is the cultural acquirer depends on the fundamental purpose of the acquisition. When it comes to strengthening the existing business through customer acquisition and economies of scale, the financial acquirer usually assumes the role of cultural acquirer. In such cases, the acquirer will be less interested in the employees of the target company than in its physical assets and customers, although this should not prevent the acquirer from selecting the best talent that the target has to offer. The main objective of human due diligence will therefore be to verify whether the culture of the target company is sufficiently compatible with that of the acquirer to allow the construction of the necessary bridges between the two organizations. The detailed due diligence checklist can be found below. Take a closer look at the structure of the business and how it makes money. Any information about competitors, market penetration or industry trends can be useful in determining the company`s potential for future profits. This is an opportunity to review and verify business model, customers, products and services, labor, materials and operating costs. Get a complete inventory of all company assets and their current market value, including automobiles, equipment, real estate and inventory. To learn more about how DealRoom can transform your company`s due diligence process, click on the link and visit our due diligence solutions page.

As with the other steps, you should already have a solid foundation of information about the employees of the target company. From the duration of management in the company to open job postings, your private company information platform should offer a lot of information about the cultural health of the company. Never assume that it is enough to ask for an open dispute. It`s not uncommon for a thorough due diligence process to reveal disputes that the owners of the selling company weren`t even aware of. Unresolved disputes discovered late in the due diligence process are not only more difficult and costly to manage, but can also delay and potentially cancel transactions. A definition of due diligence: The application of due diligence in the course of business. Here, the buyer specifically looks at the business plans and model of the target company. This makes it possible to assess whether it is viable and to what extent the company`s model fits into its model. DealRoom has been a catalyst for due diligence in hundreds of M&A transactions, and the following steps for due diligence were present in all of them: Once the key people are identified, the acquirer faces the challenge of retaining them.

Those at the top may have a stake in the company, which could generate a significant gain through the acquisition, and they may feel that they can safely leave the company or retire. Even those who are not involved in the property may decide that it is time to look for greener pastures. To complicate the situation, the acquirer may want to retain some of its new employees for the long term, while others are only retained for six months or a year. The best way to solve this puzzle is usually to put your cards on the table: tell people exactly what you hope they do, whether it`s staying for a short time or staying long-term, and designing incentives to encourage exactly that. Non-financial rewards and aspirations are also important. If you can convince people that they`re going to be part of a bigger, more exciting organization now, they`re more likely to stay. As you get a sense of employee attitudes toward your goal, you`ll probably want to go beyond surveys to spend time with frontline employees during their coffee breaks and lunch breaks, walking around factories and offices, and talking to people at the operational level. When Johnson Wax Professional negotiated the purchase of DiverseyLever, part of consumer goods giant Unilever, in 2002, CEO Greg Lawton spent more than 100 hours speaking one-on-one with Diversey executives. From these conversations, he was not only able to identify members of a new management team before the deal closed, but also design a comprehensive program to communicate what the deal would mean for everyone involved – employees, of course, but also customers, suppliers and investors.

When the deal was announced, Lawton and his Diversey counterpart, Cetin Yuceulug, had prepared a shared vision and value statement, as well as a video detailing the direction and plans for the new company, which they distributed to the company`s global employees on the day the deal was announced. • • The conduct of human due diligence requires both sustained management commitment and the allocation of the necessary Resource Elements. This is especially difficult when, as happens all too often, a potential buyer`s executives are reacting hastily to an opportunity that has suddenly appeared on their radar screen. There is little time left to develop a compelling agreement thesis, let alone find the time to do the kind of due diligence on personnel issues involved in a successful transaction.