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M&A Due Diligence and Implementation Planning

Due diligence is a critical step in any M&A deal, often accompanied by the added pressures of challenging deadlines, incomplete information and the need to manage multiple work streams.

Our M&A specialists have the experience to provide clear, focused and insightful support to help ensure that your due diligence is effective. This goes far beyond identifying business risks and HR challenges to provide you with a platform of solutions to optimise the deal outcome and deliver long-term business value.

At this step we can help you with:

  • financial exposures
  • human resource (HR) exposures
  • deal terms
  • implementation planning.

Financial exposures: Identifying and quantifying the risks, costs of a deal

We combine leading expertise in traditional and emerging business risks (such as property, cyber and environmental) with human capital risk expertise (such as talent retention, compensation, pensions and benefits).

Often a business’ most expensive investment and its most valuable asset, people risks need to be top of mind when you are considering financial exposures. Bringing the right people together to make a holistic assessment of the target business and develop innovative solutions to effectively manage risk is crucial.

Our dedicated M&A advisory teams will work with you and your other advisers to:

  • assess the operational risk exposures of the target business and any further exposures the transaction itself may bring
  • identify and evaluate employee compensation and benefit costs, including pension liabilities, executive change-in-control provisions, and employee incentive and retention arrangements
  • understand the extent and appropriateness of the target’s existing or proposed insurance programs
  • evaluate other forms of protection or potential liabilities – such as sales and supply, or employment contracts – which may avoid the need for insurance or may impose additional financial stress on the target
  • identify any potential uninsured or underinsured areas, and the solutions available to transfer or mitigate these risks
  • assess the financial implications of the current and future cost of risk.

HR exposures: Addressing the people-related issues of M&A

When an M&A deal fails, unresolved cultural issues rather than other business fundamentals are often the reasons. The reality is that business performance is driven largely by an organisation's people – their skills, innovative ideas and ability to stay engaged during difficult transition periods.

The earlier HR is considered in a deal, the better the prospects for successful integration. We can help you focus on and resolve the people-related issues that are often overshadowed in the M&A scramble.

Identifying red-flag issues and making an important first step toward successful workforce integration

We begin integration planning as soon as due diligence findings emerge, quickly identifying any red-flag issues related to employee compensation and benefits, pension liabilities or labour relations.

We work with you and your other advisers to identify and analyse:

  • the target company’s existing cost structure (total cash compensation and benefits)
  • retirement and retirement-related plans (defined benefit, cash balance, termination indemnity plans, and so on) and associated insurance arrangements
  • executive contracts covering change-in-control provisions, accelerated stock and any other contractual arrangements
  • organisational design
  • employee terms and conditions
  • restructuring and severance costs
  • key employees and retention programs
  • benefit loading differences (difference in benefits costs as a percentage of payroll between the seller’s and buyer’s plans)
  • cultural differences
  • HR systems, programs and practices
  • any HR “deal makers” or “deal breakers”.

Deal terms: Identifying the specific risks

As part of our due diligence service, we will highlight which risks are insurable and which are not. When coverage is required, we will model the cost of what is needed, and place insurance following the deal closure.

Our M&A specialists can also provide further transactional guidance and support for you and your other advisers, including structuring Sale and Purchase Agreement clauses, and negotiation prior to signing.

Capping significant exposures, warranty and indemnity insurance, cyber, environmental and tax cover

We can tailor transactional risk insurance for your M&A risks, providing you with increased options when entering into a transaction or when faced with a contingent liability.

Coverage includes warranty and indemnity (W&I) insurance, which indemnifies you against financial loss arising out of the purchase agreement such as loss due to breach of warranty, tax liability or due to an insurable known issue.

Implementation planning: Assisting you in all the preparations

A successful M&A process relies on early planning and effective project management at all phases of the process, but none more so than preparations for Day One. We can help you plan and manage your preparations to set the perfect tone for your new business right from the start.

Develop your plan for Day One

As Day One approaches, we can work with you to manage the business and people risks identified during the due diligence process. Our experts will work with you to assess the key risks, insurance arrangements and affected people programs to develop detailed integration plans – including priorities for Day One and beyond.

Tailoring a comprehensive road map to the unique demands of your transaction, our specialist M&A project management experts will help ensure effective multi-country coordination and collaboration.

Implement change management strategy and help ensure continuity and extension of insurance

To help ensure the success of Day One, we will advise on managing any business or HR risks identified during the due diligence process and by determining whether the appropriate insurance coverage is in place.

We will guide you on the suitability for integration now or in the future. If we recommend integration at a later date, we will advise on what measures to take and their cost, including change management, the effect on employee behaviour and the resulting impact on your customers.

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