Sarah Moore

People in deals leader, PwC United Kingdom

My role, and indeed my passion, is ensuring that the critical people and cultural aspects of the merger, acquisition or divestment are recognised and addressed upfront. I want the deal to be the best it can be by enabling people within the merged organisations to be the best they can be. 

My involvement runs through the deal value creation plan, due diligence and subsequent execution and integration. It spans a range of areas including:

  • Identification of people issues and employee liabilities (e.g. pensions) that could affect pricing and negotiation
  • Identification, incentivisation and retention of key personnel
  • Communication of the value creation plan
  • Identifying cultural issues and creating plans for harmonisation
  • Harmonising terms and conditions 
  • Advising on compliance issues, notably the Transfer of Undertakings Protection of Employment (TUPE) regulations.

Having worked on mergers within our own organisation, I’ve seen from the inside the importance of bringing HR leaders into deal planning and execution from the outset. As a deal value architect, I now work closely with other members of our value creation in deals team. While we all have specialisations in areas ranging from strategy and operations to tax and technology, we plan and problem solve collaboratively right through the deal process, just as we advise clients to do.

The fundamental importance of people and culture in deal value delivery is underlined in far-reaching research we’ve carried out with Mergermarket into why some transactions succeed and others fail. What comes through strongly is that savvy dealmakers identify crucial employees before an acquisition and ensure they are incentivised to remain. They also ensure wide engagement and communication of their value creation plan to help retain and build buy-in from key personnel. However, nearly half (47%) of the executives taking part say they lost more than 10% of the staff they hoped to retain following their most recent acquisition. Tellingly, among acquirers who say their latest deal lost significant value, this figure rises to 82%. 

In determining why people and culture are so critical it’s important to bear in mind that the first thing that employees think about when they hear rumours of a deal is “what future do I have in the merged organisation?” Some might start looking for other openings even before the transaction is announced. And if they do leave, you haven’t just lost a potential rainmaker, but they could also go to a competitor. Their experience will also have a strong influence on your reputation in the marketplace.

With the key assets being targeted within deals increasingly being innovators and tech specialists, these people considerations are now more important than ever. A lot of this prized talent will come from organisations where the cultural DNA is agile, entrepreneurial and often unconventional. It’s there vital to create an environment where they feel comfortable, where they see opportunities to advance their careers and where their creativity is nurtured rather than suffocated. Equally, it’s important to attract the best talent into organisations earmarked for divestment or winding down, highlighting this as an opportunity to create real value and enhance their professional reputation.