BackManage employees during a merger
Identifying leadership and retaining key talent is critical to the success of a deal
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One thing is certain in today’s globalized economy: Companies have tremendous opportunities in terms of business expansion, innovation and international collaboration. Mergers and acquisitions (M&As) have become an integral part of the Indian economy. In 2017, India’s deal volume stood at $77 billion (around ₹ 5.3 trillion), compared to the previous year’s $51 billion. This trend is likely to continue, especially for strategic buyouts and companies undergoing consolidation.
Over the past two decades, growth through acquisitions has played a key role in the success of the Piramal group. The group, which ventured into the pharmaceutical sector with its acquisition of Nicholas Laboratories in 1988, has completed around 50 acquisitions that have helped expand its presence in both the overseas and local markets.
We have identified five focus areas for managing employees during a merger that help drive deal value:
Build M&A capabilities
Leading a company through a merger requires specialists who undertake comprehensive due diligence on the deal structure, employee matters, risks, integration costs, and sources of value creation. They communicate the alignment between overall strategy and transaction objectives and pursue all stages of M&A, allowing the company to maintain operational continuity.
For instance, in a cross-border acquisition two years ago, when Piramal Enterprises acquired Ash Stevens Inc., a US-based pharma contract development and manufacturing organization (CDMO), transition teams focused on on-boarding, coaching and targeted development opportunities for key talent.
Deliver the strategic vision
Apart from completing the transaction successfully, it is also important to communicate the business rationale of the deal—why it’s being done, what the combined business looks like, what it means for people, and how we are going to operate. During our recent merger with Ash Stevens, the management teams from both companies decided to be on the ground with employees from Day 1. This helps create a shared understanding of vision, work practices, and how we will serve our clients and colleagues.
Find the right leaders
Creating a simple yet rigorous strategy for identifying leadership and retaining key talent is critical to the success of a deal. We identify leaders who can lead and execute a winning strategy and help employees settle in faster. Our leadership team stays connected with transition teams who gather feedback on employee concerns and issues. Because of our global reach, employees are able to move between locations to gain international experience and training to deliver on our global strategy.
Utilize a ‘best of-both’ approach
Assessing what to integrate, and what not to, is important. We have experienced several integrations between our distribution networks, workflows and firm platforms, but if there are inbuilt best practices that work well at the acquired firm, the entity operates independently. In one of our cross-border mergers, employees from the acquired firm participated in talent development programmes through our corporate initiatives. At the same time, the culture, quality and technology of the acquired company were retained as a best-in-class model. We also identify practical things, like what is changing and what is not, from an employee’s perspective, and review each aspect of the business to outline all the operating aspects by defining the decision-maker.
Lead with communications and a value-based culture
Our focus during mergers is on the combined culture. We accomplish this by creating a transition team that leads the on-boarding of all employees. To ensure transparency and an open communication channel during a transition after we close a deal, we create forums such as town hall meetings and road shows that help build personal connections and enable two-way communication. I have observed that creating a culture where employees know that their opinions matter, empowers them to manage customer expectations and serve our clients according to the standards.
Over the past 20 years, what we have learnt through mergers is that we are at our best when we function as one company. Our teams drive our mission of creating an engaging experience for employees from the acquired firm, making the process engaging and seamless.
Nandini Piramal is executive director, Piramal Enterprises Ltd.
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