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Mergers & Acquisitions

A deep understanding of organisations, their people,
culture and risk profile.

HR Due diligence

Starting early for successful integration

With HR and cultural factors playing such a key role in the long-term success of any M&A deal, it’s essential to identify challenges and opportunities during due diligence.

At Willis Towers Watson, we have the experience and expertise to identify potential HR issues, workforce events and key implementation concerns. We can advise on solutions to avoid large financial costs, ensure positive workforce transition, and support the long-term success of your transaction.

How we can help you gain advantage

We’ll ensure that you identify all key issues, such as those in the key areas of pensions, compensation, benefits and talent, including:

  • Collective agreements, HR programs and compensation programs
  • Compensation policies, bonus arrangements, stock plans and other key terms and conditions of employment
  • Employee benefit plan liabilities, risks and future costs
  • Talent retention and workforce organisation.

As negotiations proceed, we can continue to work alongside your legal and advisory teams, providing specialist HR and human capital expertise.

Our services

Our human capital experts can review and highlight collective agreements, HR programs and compensation programs (including deferred bonus or incentive type plans) that will affect or be triggered by your deal.

We can identify and quantify material compensation policies, bonus arrangements, stock plans and other key terms and conditions of employment. As part of this process, we will:

  • Review current practices
  • Work out approximate cost projections and balance sheet implications
  • Identify key triggers, such as change in control clauses.

We can identify and quantify material employee benefit plan liabilities, risks and future costs (cost and accounting where appropriate). The benefits we would typically review would include:

  • All formal plans, formal agreements with individual employees and with their representatives
  • Benefits provided as a result of legislative requirements
  • Informal promises that give rise to a constructive obligation
  • Executive and top-hat arrangements and individual promises
  • Post-employment benefits such as pensions, other retirement benefits, post-employment life insurance and post-employment medical care
  • Long-term employee benefits, including long service leave, sabbatical leave, jubilee or other material long service benefits, long term disability and other deferred compensation
  • Pre-retirement, early retirement and bridging pension plans
  • Termination indemnities other than redundancy payments.

With many M&A deals leading to a review of workforce requirements, we would identify all material issues relating to retention of key employees. And we would also review potential severance and redundancy costs.

Deliverables

Typical deliverables include:

  • An executive summary of our key findings (using our tried and tested templates or your own)
  • Expert input to team and update calls during the due diligence process.
  • A summary of specific findings in relation to key areas of interest to you.

If your initial bid for a target organisation is successful, we’ll make sure that your further review of compensation and benefits provides complete clarity on all key issues.

We’re also able to provide expert support on pensions and transfer calculations methodologies.

Case Study - A leading consumer products company with a global workforce of around 14,000 people across a number of different territories

Situation
Client sought to acquire a consumer products company from a major pharmaceutical company, and asked Towers Watson to support them in the process, from due diligence through integration

Solution

  • Drove the due diligence process, focusing on identifying all inherited HR financing shortfalls
  • Defined likely compensation and benefit integration blueprints by country, ensuring future HR programs were suitable for the smaller business (by size), now operating in a lower margin sector (all HR programs were previously suitable to pharmaceutical sector). Allowed for ongoing cost differentials in pricing model
  • Negotiated suitable financial adjustments and/or purchase and sale agreement wordings to ensure all legacy liabilities inherited were fully financed
  • Prepared opening balance sheet disclosure for new division
  • Put in place self-standing HR programs, including payroll, from Day 1
  • Drove execution of asset transfers where relevant
  • Executed integration blueprints in all 30 countries

Outcome

  • The acquiring company is fully delivering on its model for the confectionary company – no surprises
  • Programs in all geographies were set up seamlessly on Day 1. In particular, everybody continued to get paid, and all insurance programs were in place
  • HR programs were revisited, benchmarked and changed to be in line with the new business sector