“Human capital metrics and perspectives bring insights into the true value of every transaction.”
2020 saw a flurry of deals that drove global mergers and acquisitions to $3.6tn. Ensuring that HCM students are adept at leveraging HC metrics in these transactions, Andrew Doyle, Partner at High Plains Advisors and former CHRO of Oppenheimer Funds, joined Dr. Solange Charas’ Finance for Effective Human Capital Management class to discuss the role of human capital metrics play in valuing deals.
The class discussion focused on Andrew’s experience representing HR on several global, multi-billion dollar transactions teams throughout his career. He discussed examples of where rigorous HR due diligence, supported by quality metrics, positively impacted a transaction outcome. Also discussed were instances where a lack of current and valid human capital data both slowed down the due diligence process and negatively impacted the outcome. Key takeaways from Andrew’s discussion on conducting an effective due diligence analysis include:
- Look for Red Flags - Make certain to determine all pension and benefits liabilities, equity plans and change-in-control provisions, and pending litigation around grievances, sexual harassment claims and discrimination
- Assess Culture - What are the drivers that make the company a key M & A target? Is it the leadership, talent, technology, etc. Can you quantify that value?
- Retention - Who are the key opinion leaders? Who are the high potentials? Is there a retention strategy and budget in place to ring fence that population? If so, is it aligned to compensation?
- Integration Plan & Timeline – Develop a detailed integration plan to include timelines, stakeholder communications, deliverables and don’t forget to pay attention to the needs of the acquirer.
The views expressed are those of the author and do not necessarily represent the views of any other person or entity.
