M&A Due Diligence Support

One of the most serious risks in a merger or acquisition is the unintended loss of the target company’s most valuable employees.  This risk is further complicated by the fact that it is extremely difficult to determine just who the most valuable people are.  If the acquiring company is proactive and strategic in its M&A approach, it can use Organizational Connectivity™ Analysis to reveal key individuals in specific networks within a target company so that a better effort can be made to retain them.  This will help reduce the loss valuable human and intellectual capital that usually occurs in a merger or acquisition.

For example, take a team of investment bankers that typically work together on deals.  Imagine if we were to ask each of them, "Who do you turn to for critical information to get your work done?" and that data revealed the following network diagram: 

While the diagram shows Charles and Helen to be key members of the network, the fact that these two are somewhat junior members of the group might obscure their true value to the work of the team.  This demonstrates that the value of a company's workforce is not just the sum of individual members' talent and capabilities, but also depends upon the connections and relationships among them.

Therefore, forward-thinking companies that are seriously contemplating an acquisition or merger must ensure that their due diligence work not only accounts for human capital and organizational culture factors, but also the element of social capital.

Whereas, human capital is about the individual traits (like skills, educational background and character) that each person brings to the organization, social capital is about the relationships that each person has on others and how they affect them - both positively and negatively. Social network analysis provides a visual mapping of social capital from many different perspectives.