People and Change

Mergers and Acquisitions - Don’t forget the People!

Patrick Gallen
By:
insight featured image
The last twelve months has seen many companies reporting unprecedented growth, with the NI economy set to grow a staggering 6% this year, and a predicted 4% for 2022. The NI job market is also buoyant, or as Forbes like to put it ‘hot’, with record levels of job vacancies being posted, and for the first time in years the unemployment level is down.
Contents

Subscribe to our mailing list

Update your subscriptions for Grant Thornton publications and events.

It’s not surprising then that mergers and acquisitions are also hitting record levels, with a predicted $6 trillion of transactions globally this year, up from $3.6 trillion in 2020.

Mergers and acquisitions are an exciting time for companies. Expansion and growth are great news for business, but very often the people who helped to make these companies profitable and attractive for sale, can be an afterthought when it comes to selling the business.

Both parties in a deal are potentially liable for substantial costs if the proper due diligence isn’t properly carried out and acted upon. It’s not just a new business being acquired, but new teams of people as well.

In most if not all cases TUPE applies to any acquisition or merger. TUPE is the well-known acronym for the Transfer of Undertakings (Protection of Employment) Regulations 2006. TUPE applies in two situations, firstly when a business (or part of one) is transferred to a new entity, and secondly when a service provision change takes place.

When TUPE applies, the buyer takes on the rights, responsibilities, and liabilities of the employees who transfer under operation of law. TUPE is not an optional piece of legislation. No company is able to decide to opt out of it, and, therefore, it’s important that companies are well versed on its implications, and what to look out for when acquiring or merging.

This is important not just because of the financial implications.  As you come to integrate a new workforce post-acquisition, it is vital that their experience of the new company is as positive as you can make it, so that they integrate seamlessly into your business and are as productive as possible from day one.

It is therefore imperative that HR due diligence, and proactively managing the people implications of an acquisition, is not an afterthought but rather treated as one of the fundamentals to acquiring and merging.

In our experience, businesses that include a strong people focus alongside their other due diligence work, and who manage the transfer and integration of staff in a positive and engaging way, will set themselves up for a smooth and successful merger or acquisition.  Specialist advice in HR M&A can be an excellent source of support in what can be a very disruptive time for a company, but one full of opportunity if managed properly.