THE M&A TOOLKIT: PEOPLE STRATEGY FOR BUSINESS SUCCESS
Keeley Mooneyhan, SPHR Managing Director
HR Matters, Inc. NHRMA Conference 2012
2
85% of Failed Acquisitions are Attributable to HR Issues.
• Leadership Engagement 1
•M&A Process and Key Terms 2
• Connecting the dots: Business to People Strategy 3
Today’s Learning Objectives
Leader Engagement
HR Leadership
and Engagement
Leadership Rhythm
Biz
Str
ate
gy
SWOT
Co
re H
R
M&A Milestones/Deal Flow
Strategy Identified
M&A Process
Negotiations
Letter of Intent
Confirmatory Due Diligence
Definitive Agreement
Sign/Close
Integration
What is Strategy?
"Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".* * Johnson and Scholes (Exploring Corporate Strategy)
Outcomes of Setting Deal Strategy
Define how the organization will create value
Confirm areas of focus and strategic direction
Identify any gaps in resources (skills, knowledge, assets, budget, partners, etc.)
Understand the values and expectations of key stakeholders
HR Strategy: Key Strategy Steps
Define Objectives: What do we want to achieve
Define Strategy: How do we meet our objectives?
Tactics: What will we do?
Plan: What are our priorities, when, and who will do it?
Implementation: What is the Execution plan?
Structure
Definitive Agreement
Let’s Make a Deal
Letter of Intent
Target Company
Structure of M&A Transactions
Stock Purchase
Asset Sale
Joint Venture
TARGET
ASSETS
TARGET TARGET PARTNER JV
Letter of Intent (LOI)
• Initial Agreements
• Covenants
• Conduct of Business
• Non-disclosure Agreement
• Regulatory Requirements (Public or Private Company)
• Expiration/Non-binding Provisions
Confirmatory Due Diligence
• Intellectual Property
• Physical Assets
• Revenue History
• Third-party Relationships
• People
• On-balance sheet and off-balance sheet assets/liabilities
Definitive Agreement (DA) • Asset or Stock Purchase Agreement
(APA or SPA)
• Final financial, tax, and legal details
• Consideration
– Escrow
– Holdback
– Earn-out
– Carve-out
• Closing Conditions
• Representation and Warranty (Reps & Warranties)
• Indemnification
• Seller’s and Founder’s Non Complete
• Disclosure Schedule
• Transition Services Agreement (TSA)
• Employee Terms
– Key and Named Employees
– Stock/Equity Treatment
– Change In Control and Double Trigger
– Section 280G
– Non Solicits
– Non Compete
– Successor Liabilities
– International Considerations
Integration
SWOT Analysis
Greatest Strengths of Business and HR
Weaknesses of Business and HR
Where’s the Opportunity?
External Threats
Summary: HR M&A Toolkit Leader Engagement: Strategic Direction & HR Alignment • Work with Leadership team to define the business strategy including the product roadmap, desired
end state, guiding principles, and rules of engagement. • Define the people strategy to support the business objectives. Define what they can do/not do now. • Develop a coaching relationship, providing advice and guidance as business imperatives change or
accelerate.
HR Strategy to Support Business • Define corresponding people strategy for the business objectives • Document Value Drivers for each business and any acquisition objectives from a people perspective • Outline required resources to support the strategy
Organizational Details, Walking Deck • Capture the business strategy and corresponding people strategy • Document Value Drivers for each business and any acquisition objectives • Define which functions will be required to participate in a potential deal, who will lead each function
and whether or not the effort will require additional resources • Capture key learnings, historical data, and document plans of record
M&A Terminology • Familiarize team and leaders with terms that may have an impact on the people strategy. • Define additional terms for your organization
The Initial Plan and SWOT Analysis • Know the organization: identify organization strengths, weaknesses, opportunities, and threats. • Build a SWOT for every scenario when applying strategic goals and value drivers to any acquisition or
business change situation to determine a potential plan to mitigate risks and preserve value. • Build out plans to include due diligence, current plans or record, and potential HR work streams,
milestones, budgets and assumptions to get to the end state.
DISCUSSION
© 2012 HR Matters, Inc.. All rights reserved. The information herein is for informational purposes only and represents the current view of HR Matters as of the date of this
presentation. Because HR Matters must respond to changing market conditions, it should not be interpreted to be a commitment on the part of HR Matters, and HR Matters
cannot guarantee the accuracy of any information provided after the date of this presentation.
HR MATTERS MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.
Keeley Mooneyhan, SPHR Managing Director
HR Matters, Inc. [email protected]
415-606-6640
APPENDIX- HANDOUT
THE M&A TOOLKIT: PEOPLE STRATEGY FOR BUSINESS SUCCESS
Keeley Mooneyhan, SPHR Managing Director
HR Matters, Inc. NHRMA Conference 2012
Summary: HR M&A Toolkit Leader Engagement: Strategic Direction & HR Alignment • Work with Leadership team to define the business strategy including the product roadmap, desired
end state, guiding principles, and rules of engagement. • Define the people strategy to support the business objectives. Define what they can do/not do now. • Develop a coaching relationship, providing advice and guidance as business imperatives change or
accelerate.
HR Strategy to Support Business • Define corresponding people strategy for the business objectives • Document Value Drivers for each business and any acquisition objectives from a people perspective • Outline required resources to support the strategy
Organizational Details, Walking Deck • Capture the business strategy and corresponding people strategy • Document Value Drivers for each business and any acquisition objectives • Define which functions will be required to participate in a potential deal, who will lead each function
and whether or not the effort will require additional resources • Capture key learnings, historical data, and document plans of record
M&A Taxonomy • Familiarize team and leaders with terms that may have an impact on the people strategy. • Define additional terms for your organization
The Initial Plan and SWOT Analysis • Know the organization: identify organization strengths, weaknesses, opportunities, and threats. • Build a SWOT for every scenario when applying strategic goals and value drivers to any acquisition or
business change situation to determine a potential plan to mitigate risks and preserve value. • Build out plans to include due diligence, current plans or record, and potential HR work streams,
milestones, budgets and assumptions to get to the end state.
Leader Engagement
HR Leadership
and Engagement
Leadership Rhythm
Biz
Str
ate
gy
SWOT
Co
re H
R
HR Strategy: Key Strategy Steps
Define Objectives: What do we want to achieve
Define Strategy: How do we meet our objectives?
Tactics: What will we do?
Plan: What are our priorities, when, and who will do it?
Implementation: What is the Execution plan?
M&A Terminology List
M&A Milestones/Deal Process
Business Strategy
Negotiations
Letter of Intent
Confirmatory Due Diligence
Definitive Agreement
Deal Sign/Close
Integration
Structure
Stock
Asset
Joint Venture
Deal Terms/Legal Agreements
Letter of Intent (LOI)
Initial Agreements
Covenants
Conduct of Business
Non-disclosure Agreement
Regulatory Requirements (Public or Private Company)
Expiration/Non-binding Provisions
Definitive Agreement (DA)
Asset Purchase or Stock
Purchase Agreement (APA
or SPA)
Final financial, tax, and legal
details
Consideration
Escrow
Holdback
Earn-out
Carve-out
Retention Pool
Closing Conditions
Representation and Warranty
(Reps and Warranties)
Indemnification
Seller’s and Founder’s Non
Complete
Disclosure Schedule
Service Level Agreement
(SLA)
Transition Services
Agreement (TSA)
Employee Terms
Key and Named
Employees
Stock/Equity
Treatment
Change In Control
and Double Trigger
Section 280G
Non Solicits
Non Compete
Successor Liabilities
International
Considerations
Conduct SWOT Analysis
Positive
Negative
Internal
Strengths
Weaknesses
External
Opportunities
Threats
© 2012 HR Matters, Inc.. All rights reserved. The information herein is for informational purposes only and represents the current view of HR Matters as of the date of this
presentation. Because HR Matters must respond to changing market conditions, it should not be interpreted to be a commitment on the part of HR Matters, and HR Matters
cannot guarantee the accuracy of any information provided after the date of this presentation.
HR MATTERS MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.
Keeley Mooneyhan, SPHR Director of M&A Practice
HR Matters, Inc. [email protected]
415-606-6640