People risks disrupting M&A activity as cross-border deals become more popular, new study finds

 
William Turvill
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A new report has highlighted how people risks are impacting on M&A

A new report has highlighted M&A dealmakers' concerns over people risks impacting on transactions.

Issues such as employee retention, cultural integration and talent management are especially prominent in relation to cross-border deals, according to Mercer’s People Risks in M&A Transactions report, out today.

In addition to legislative and regulatory issues, Mercer also highlighted concerns over cultural and operational mismatches as well as differing leadership skills and expertise.

Read more: M&A dealmakers aren't very good at not losing data

The report also noted that people risks are enhanced at the time of a "highly competitive deal environment featuring truncated timelines, less access to information and increasingly activist shareholders”.

Mercer said 41 per cent of buyers report less time to complete due diligence compared with three years ago. Some 33 per cent claim sellers are providing less information about assets for sale. And 34 per cent of sellers said more resources are now required to address HR issues.

In 2015, global M&A volume hit a record $5.05 trillion, according to Dealogic - up 38 per cent from $3.67 trillion in 2014.

Read more: Here's why 2015 has been such a bumper year for M&

Global cross-border M&A volume last year was $1.56trn, across 9,490 deals. This was up from $1.09trn in 2014 and the second highest on record, according to Dealogic, behind 2007.

Mercer's report also suggested multi-country M&A activity is on the up.

For its research, Mercer collected 323 survey responses from M&A professionals, conducted 78 interviews with corporate and private equity clients and analysed nearly 450 transactions last year.

It said that half of respondents reported recently conducting cross-border deals. And 24 per cent said they were more likely to consider multi-country transactions than they were in January 2014.

Adam Rosenberg, Mercer’s M&A leader for Europe, said: “The more successful deals typically are those where people risks are addressed at the same time and in the same way as broader deal risks. Gone are the days when people risks are addressed after the deal signs.”

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