M&A activity in the U.S. through the 3rd quarter 2020 was 15% lower than the same period in 2019, with 12,161 v. 14,323 deals. The aggregate transaction value for the same periods showed 2020 was 28% lower than in 2019 ($1,377.6 billion v. $1,925.4 billion).[1]
I’ll be the first to admit I’m not an M&A expert, although I know several advisors who are quite successful in this endeavor. I’m a talent assessment expert, one who spends his time assessing candidates and matching them to the right place in a business. As a professional recruiter I work with businesses on talent selection – new hires, promotions, and succession planning.
So why am I citing several M&A statistics? Simply put – to indicate that a lot of effort and money is dedicated annually to this segment of our economy. Further, with all that effort and money, there is talent involved in each transaction and one metric for a successful merger is the ability to effectively integrate the talent within each business. Yes, talent = people.
Why A Talent Assessment Process?
I mentioned 2 data points earlier. The sheer magnitude of the investment requires attention to this process. Recently McKinsey & Company published an article[2] discussing the retention and selection needs in M&A. If you have the time it’s worth the read! For our purposes, however, I want to quote from the last paragraph of the article, as I believe it’s important to the development of a rigorous and effective talent assessment system.
“With companies increasingly seeing talent as a vital competitive advantage, delivering a positive retention and selection experience is an element essential to the success of any merger or acquisition. That requires starting retention efforts early, identifying and safeguarding employees critical to business continuity, and moving quickly on talent selection to quell rumors, remove uncertainty, and allow the organization to get back to focusing on the business. Making sure the selection process is transparent and fair will help retain the best talent and shore up employee morale, while proper onboarding will give the new workforce the tools to succeed in the new organization.”
How Does Talent Assessment Improve Retention and Selection?
Effective talent assessment can use data to develop benchmarked position profiles for every position in a business – or for select positions. In an M&A process the talent retention and selection process is compacted by time and money. Even within a compacted timeframe, when a business takes the time to develop profiles to assess the best person-future fit for positions in both the acquiring and to-be acquired company, the talent data will provide support for the retention and selection decisions that must be made.
What’s Involved In A Talent Assessment Process?
The McKinsey article discusses that “(i)dentifying the candidates for key positions in the combined company is a priority that HR leaders should start addressing even before the deal closes. From determining the selection criteria to communicating, implementing, and tracking outcomes, the decisions made at this stage will bear heavily on the integration’s success.”
A proven and effective way to identify those candidates is to systematically (and simply) –
- Evaluate how candidates think and make decisions,
- Identify what are their motivators and drivers, and
- Identify what are their preferred behavioral styles.
Matching these 3 data sets to a previously defined benchmarked position profile that is created by management and leadership teams in each business will provide M&A decision-makers objective data that can inform the retention and selection process through a more rigorous and effective evaluation of the candidates for key positions.
Summary
Time and again I’ve seen the success in using a talent assessment process to develop benchmarked position profiles to inform candidate selection. It can and should be one part of the talent and retention process in an M&A. For those interested in identifying the import of these 3 data sets, I offer a sample assessment that can, amongst other things, inform you of your emotional intelligence while further illustrating the utility of this tool in the M&A talent and retention process.
[1] Flashwire US Monthly November 2020
[2] Talent retention and selection in M&A October 12, 2020