Mergers and Acquisitions
M&A Readiness Podcast Series: Talent Assessment for Private Equity Sponsors

Thoughtful talent assessment is a necessary part of any successful M&A transaction. But companies are often slow to confront the “people piece” within the fray of the deal. In this podcast, Mercer’s M&A and Leadership Development experts discuss how private equity firms can lay the groundwork for a successful merger by starting with an unbiased assessment of leadership talent.

Jeff Cox, Global M&A Transaction Services Leader

Dr. Pat Shannon, Leadership Development

M&A transactions trigger the need to make challenging and sometimes emotional decisions about individuals — including long-term productive employees. For example, a merger often produces redundancies: Suddenly, there are two CFOs, two customer service vice presidents, and so on.

Questions swirl about who should stay, who should go, and who should be placed in a different role.Talent decisions often involve more complexity than other integration decisions (such as products, markets, and customers) yet may be made with less rigor, discipline, and data. For M&A leaders to be successful, they need to raise their game in talent assessment.

Our experience dictates that successful buyers develop a keen understanding of what skills and competencies their leaders need to deliver on business objectives, whether they can succeed in the new company culture, and if their decision-making history is consistent with the new organization’s risk profile.

“Ultimately, the talent the new company employs can mean the difference between winning and losing in today’s competitive and volatile marketplace.”

CHRO, Fortune 100 Company

Why do private equity sponsors need an independent expert to conduct leadership assessment?

Private equity sponsors benefit from an unbiased deep read on a leader they’re considering for one of their portfolio companies, our experience finds. Private equity does a good job filtering leaders, but through the filter of the transaction at hand.

“How will this leader build the senior team, grow innovation, manage a key departure, develop a new relationship, even build a culture?” says Pat. “In short, what are the leader’s top strengths and development areas?”

Mercer uses a nimble three-step process to conduct a leadership talent assessment within a short window of time:

  1. Clearly define the leadership role and core competencies and expectations. This includes understanding context. Are they trying to grow the business by a certain amount, pursue innovation, reduce costs, or a combination?
  2. Conduct the assessment. This is a 2-3 hour in-depth conversation with each leader—not a grill session, but a comfortable conversation that invites them to share their professional successes and challenges. We also ask them to complete an online leadership style assessment to help us understand their personality attributes—what drives them and what might hold them back.
  3. Prepare a comprehensive report, including a one-page summary of findings and recommendations that the organization can use to make an even stronger leader. After sharing our insights with the team we conduct a brief coaching session with the leader. In our experience, even seasoned leaders with strong resumes are very open to the coaching and find they have something to gain.

Private equity firms in particular need to get the talent/leadership equation correct, and a thorough, unbiased talent assessment lets them do that with valuable information. But for any company, focused, rigorous evaluations of leaders and key positions ensure that the acquirer’s talent decisions are optimized to meet the current and future needs of the new organization.

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