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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.

At Willis Towers Watson, we advise on circa 2,000 transactions each year across 120 countries worldwide. Our dedicated team of M&A specialists draw on this experience to provide clear, focused and insightful support to help ensure that your due diligence is effective.

We will go far beyond identifying business risks and HR challenges to provide you with a platform of solutions to optimize 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

When you are looking to acquire a business, we can help you identify, quantify and manage the full spectrum of financial exposures – from business to people risks.

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).

Employees are often a business’ most expensive investment and their most valuable asset. With this in mind, it is essential to closely examine people risks when you are considering financial exposures. We will bring together finance and human resources (HR) work streams to make a holistic assessment of the target business and develop innovative solutions to effectively manage risk.

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

By reviewing the potential financial exposures before the deal is closed, we can work with you to shape a comprehensive risk management plan that gives your deal the greatest chance of success.

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

The long-term success of any M&A deal is as much about people and culture as it is about the financials. 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 organization's people – their skills, innovative ideas and ability to stay engaged during difficult transition periods.

Research shows that 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 labor relations.

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

  • 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
  • Organizational 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”

By reviewing the potential HR issues before the deal is closed, we can work with you to shape a comprehensive post-integration HR plan that gives your deal the greatest chance of success.

Deal terms: Identifying the risks specific to your M&A deal

Our market-leading global M&A team can support you and your advisers on bespoke risk management for your deal.

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

Our market-leading experts will work with you to tailor transactional risk insurance for your M&A risks. This provides 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.

W&I is designed to support an arm’s-length negotiated purchase by providing the insured with financial protection against liabilities that could otherwise seriously damage the value of their business, the asset being acquired or the sale proceeds.

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 multicountry 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.

From a change management perspective, our research and experience show that addressing people factors effectively is critical to M&A success. We will support you in managing change effectively through our expert integration services. We will help your integration leaders understand the impact your transaction will have on various employee groups and the potentially different agendas of various stakeholders.

By anticipating the effect on employee behavior and the resulting impact on your customers, we can work with you to shape a comprehensive change management plan that gives your deal the greatest chance of success.

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