How to Perform Organization and Talent Due Diligence
As you proceed through the due diligence stage of an acquisition, you’ll want to ensure you’ve thoroughly evaluated the target company’s organization and talent. This talent and staff review is key to any human resources due diligence checklist for acquisitions, as it allows you to learn more about the employees at the target company and their expectations. Before you make any offers or promises to the target company’s employees, make sure you request critical talent documents first and correctly evaluate them.
What Organization and Talent Related Information Should the Acquirer Request?
Part of any HR due diligence checklist should include a thorough review of a target company’s documentation about their organization and talent. Some of the primary documents you should request to properly evaluate their talent include:
- Full census of all employees
- Copies of any bonus plans
- Active employee performance improvement plans or disciplinary actions
- Any exit interview information if available
- Bios and resumes for key talent
- Description of any human resource systems used
- Employee benefit plan descriptions and cost
- Copy of current employee handbook and/or safety policies
After you receive these documents, you can use the information to assess the overall organization and talent of the company. The documents can also help you identify any potential areas of concern you’ll need more information about and see where you might have talent overlap between your companies. If you do find talent overlap, knowing about it early can give you time to decide whether to integrate teams or pair them down when there’s unnecessary duplication.
What to Evaluate When Reviewing a Target Company’s Organization Related Information
When evaluating the above documents, there are some key focus areas acquirers typically inspect when evaluating the potential acquisition’s organization and talent.
One of the most important documents to receive and evaluate is a full census of all employees, as it can help your team work on competitive offer letters and employment structures for the acquisition’s team. As part of your review of the existing census, a thorough analysis should be performed to see how the target company’s existing salaries, benefits, and other employee programs compare to your plans. In today’s market, this area of due diligence should not be taken lightly, as most acquisitions are occurring for talent acquisition more than anything else.
If an acquirer does not fully understand the current offerings of the target company and their offers don’t at least meet or exceed the employees’ current pay, benefits, and opportunities, the employees might look to leave the company once the acquisition is announced. The irony of doing an acquisition primarily for the talent and then not taking the adequate time to understand the talent is all too familiar with unsuccessful acquisitions.
Another key area of inspection within the organizational arena of a company is a thorough inspection of the company handbook. The handbook provides a wealth of knowledge regarding policies and procedures employees are used to and the expectations they might have for a company. The handbook will also often have documentation about any safety or health-related policies and legal compliance matters that you’ll need to understand through a transaction.
Additionally, any type of employee surveys, exit interviews, or onboarding documents provided by the acquiree can offer great insight into the overall culture and management of a company. What acquirers hear during the conversations with leadership and what employees tend to tell can sometimes be very different stories. The ability to see “behind the curtain” with this type of information can be very eye-opening and critical for a successful transaction.
How to Benefit the Most From an Organizational and Talent Evaluation
As you work your way through various organizational documents and your HR due diligence checklist, you can ensure the process is efficient by clearly defining your areas of importance. With the most important aspects defined, you can more easily identify the most important talent and organization information you need from the target company to make your decision. By identifying the most important information, you’ll put yourself in the best position to keep the due diligence process on task and focused.
If your evaluation reveals any areas of concern, you’ll want to quickly document and share the concerns with relevant team members or leadership. You may also want to request supplemental information to give your leadership the details they need to make a fully informed decision about whether to continue, stop, or change the acquisition. Throughout this entire process, you’ll want to quickly receive any primary or supplemental documents to ensure you have enough time to thoroughly review the information.
Choose Thinc Strategy for Organization and Talent Evaluation Assistance
When you need organization and talent evaluation assistance during an acquisition, turn to the certified merger and acquisition advisors at Thinc Strategy. No matter where you are in the expansion through acquisition process, our advisors have the expertise needed to ensure a potential acquisition meets your acquisition goals and stays on track. Our team can also help you create a comprehensive mergers and acquisitions HR due diligence checklist, ensuring you have all the information you need to make a well-informed decision.
Learn more about our M&A advisory services today. If you have any questions or want to schedule a free acquisition consultation, please contact us.