Thoughtful talent assessment is a necessary part of any successful M&A transaction. But companies are often slow to confront the “people piece” within the fray of the deal. In this podcast, Mercer’s M&A and Leadership Development experts discuss how private equity firms can lay the groundwork for a successful merger by starting with an unbiased assessment of leadership talent.
Jeff Cox, Global M&A Transaction Services Leader
Dr. Pat Shannon, Leadership Development
M&A transactions trigger the need to make challenging and sometimes emotional decisions about individuals — including long-term productive employees. For example, a merger often produces redundancies: Suddenly, there are two CFOs, two customer service vice presidents, and so on.
Questions swirl about who should stay, who should go, and who should be placed in a different role.Talent decisions often involve more complexity than other integration decisions (such as products, markets, and customers) yet may be made with less rigor, discipline, and data. For M&A leaders to be successful, they need to raise their game in talent assessment.
Our experience dictates that successful buyers develop a keen understanding of what skills and competencies their leaders need to deliver on business objectives, whether they can succeed in the new company culture, and if their decision-making history is consistent with the new organization’s risk profile.
“Ultimately, the talent the new company employs can mean the difference between winning and losing in today’s competitive and volatile marketplace.”
CHRO, Fortune 100 Company
Why do private equity sponsors need an independent expert to conduct leadership assessment?
Private equity sponsors benefit from an unbiased deep read on a leader they’re considering for one of their portfolio companies, our experience finds. Private equity does a good job filtering leaders, but through the filter of the transaction at hand.
“How will this leader build the senior team, grow innovation, manage a key departure, develop a new relationship, even build a culture?” says Pat. “In short, what are the leader’s top strengths and development areas?”
Mercer uses a nimble three-step process to conduct a leadership talent assessment within a short window of time:
Private equity firms in particular need to get the talent/leadership equation correct, and a thorough, unbiased talent assessment lets them do that with valuable information. But for any company, focused, rigorous evaluations of leaders and key positions ensure that the acquirer’s talent decisions are optimized to meet the current and future needs of the new organization.