In the past, mergers and acquisitions (M&A) have been handled through legal teams, not HR. But now as the importance of employee experience increases and becomes front and center with organizations, HR is taking on a key role with M&A. How do HR teams adjust and take on more of the M&A responsibilities? And where do they learn more? We invited Sachin Kumar, Head of M&A Strategy for People at Okta to join one of our podcast episodes to answer those questions and more. Let’s first start with finding out more about Okta.
What Is Okta?
Okta was founded in 2008 in the middle of a recession. You can learn about Okta’s company history from their co-founders, Todd McKinnon and Frederic Kerrest on this video. See how Okta went from a PowerPoint proposal Todd pitched to his wife to a massive identity and access management company.
Okta’s vision is to, “Accelerate a world where everyone can safely use any technology. We bring simple and secure access to people and organizations everywhere.” And here are some incredible stats from their website:
Source: Company | Okta
Who Is Sachin Kumar?
I had a great chat with Sachin Kumar, PMP, CRP on our podcast. Here’s a little bit of information about Sachin’s background and present role.
I asked Sachin how he ended up in the wonderful world of HR. He was working in the business development world in a Fortune 500 company. He was evaluating potential targets for mergers and acquisitions (M&A) and during the acquisition integration he began interacting with the HR teams. He was “really floored by the work they did.” Sachin’s perception of HR at the time was that it was a monolith function, meaning, he thought it was a large and impersonal corporate structure. What he realized was in fact it was the underlying engine that drives business through data crunching and change management. It grabbed his attention. So he moved into specializing in HR and over the last 12 years has facilitated over 100 M&A transactions.
Sachin’s current role is Head of M&A Strategy for People at Okta. He is a proven leader with excellent aptitude for aligning people initiatives with operational objectives and managing the people aspects of mergers and acquisitions. He has a deep understanding of managing cross-border transactions, and has executed 75+ integrations and 10 care-out transactions. He is experienced in employee cost modeling, compensation analysis, job leveling, benefits analysis, impact assessment, HR systems analysis, and employee retention and change management strategies.
Now, let’s dig into the topic of the podcast…
The Role of HR During The M&A Process
HR’s History In M&A
During the industrial economies in the pre-1990s, companies focused on infrastructure, products, and the market. People were critical in the workforce, but there were a lot of unions. Companies leaned on legal teams for M&A.
In the late 1990s, there was a shift from industrial economy to knowledge economy. We saw that people moved from the periphery to the core of M&A. Companies started looking at people as a huge asset. When companies acquire and integrate another organization, we give absolute importance to people and the people ops function. More and more companies now have a role for M&A within HR.
Why Is HR Involved In M&A?
HR is probably one of the most critical functions in M&A ensuring that the integration and synergy is achieved between two companies. HR should have a seat at the table and should be involved in looking at a new target company before the M&A process starts. They can see if the company is a culture fit, flag the costs of integration, and research the cost of people.
HR’s Role in Due Diligence Through To Close
The process from due diligence to the closing of a merger or acquisition is very intense. It’s a lot of work to ensure the experience is delightful for employees. HR is involved in many areas – let’s consider a couple of them:
- Valuation of the company. HR is key in reviewing people-focused numbers that could impact the value of the purchase. Those include a high turnover rate, the cost of compensation and benefits, the quality of resources (such as subject matter experts and industry experts), and retention costs.
- Impact of risks. HR is critical in research compliance (for immigration), employee relations, ongoing litigations, and the cost implications.
There’s much more we cover in the podcast, such as:
- Compliance of payroll taxes and immigration laws
- High turnover issues
- Which company dictates the terms of the M&A
- The impact of the differences in sizes of the companies
- Who is responsible for change management and communications
- Advice to HR leaders to avoid pitfalls of M&A failures
Listen to the whole podcast here: The Role of HR During the M&A Process
This is one of our longest episodes at 31 minutes but is well worth your time! It is packed full of useful information about a topic we’ve never covered before.