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Managing the Merger & Retaining People-Based Economic Value. Patrick Donohue National Lead Partner Human Capital M&A Services Deloitte & Touche. Priorities and Strategies in Managing a Merger. Speed and Simplicity. Minimize Disruption. Optimal Cost. Strategic Fit. 1. Minimize Disruption.

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managing the merger retaining people based economic value
Managing the Merger &Retaining People-Based Economic Value

Patrick Donohue

National Lead Partner

Human Capital M&A Services

Deloitte & Touche

priorities and strategies in managing a merger
Priorities and Strategies in Managing a Merger

Speed and Simplicity

Minimize Disruption

Optimal Cost

Strategic Fit

priorities and strategies in managing a merger1

1. Minimize Disruption

2. Speed and Simplicity

3. Optimal Cost

4. Strategic Fit

Priorities and Strategies in Managing a Merger

Day One

On Going Operations

1. Optimal Cost

2. Strategic Fit

3. Speed and Simplicity

4. Minimize Disruption

infrastructure strategy alternatives
Infrastructure Strategy Alternatives
  • Absorb

Bringing the target into the new parent

    • Advantages: The “Obvious Choice”, simple and direct, demands little executive time
    • Disadvantages: “Conquering Army” approach, reduced value on key assets and people in the acquired company, great strain on parent company resources
  • Design A New Infrastructure
    • Advantages: Optimal strategic fit and cost structure.
    • Disadvantages: May be more disruptive during transition and add time and complexity to the launch of the new organization.
  • “Clone & Go”
  • Duplicating the infrastructure of the target
    • Advantages: It works, its quick, and can minimize disruption. Can be an effective temporary strategy.
    • Disadvantages: The adopted model likely to be a poor fit for a smaller, younger organization.
especially during a merger pay alone will not keep people
Especially During a MergerPay Alone Will Not Keep People

Trust

Fair Market Compensation

Total

The

Job

Rewards

Strategy

Wealth

Accumulation

Career & Growth Opportunity

retention of people based economic value starts with the business case of the merger
Retention of People-Based Economic Value Starts with the Business Case of the Merger
  • Capitalize on Economies of Scale
    • Reduce overhead
    • Eliminate redundancies
    • Access markets
  • Leverage Core Business
    • Forward integration
    • Backward integration
    • Acquire substitute product
    • Grab market share
  • Transfer Skills/Technologies
    • Acquire distribution channel
    • Make a bet on new technology
    • Invest in new product line
start with the business case continued
Start With the Business Case (continued)

Degree of Intellectual Extent of Capital Transfer Retention Effort

Moderate Focused

High Broad

Very High Extensive

  • Capitalize on Economies of Scale
  • Leverage Core Business
  • Transfer Skills/Technologies
where is the intellectual capital

Assets

Sample Retention Targets

  • Group Head
  • Key Technical Contributor
  • Human Resource Director
  • Human Capital
  • Leadership
  • Expertise
  • Culture
  • Structural Capital
  • Process Efficiency
  • Database/Knowledge Base
  • Network/Alliances
  • Process Owner/Case Manager
  • CIO/IT Professional
  • VP, Business Development
  • Account Manager
  • Marketing Manager
  • Sales Rep
  • Key Accounts
  • Brand Equity
  • Customer Capital
Where is the Intellectual Capital?