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This year may prove to be a record-setting one for mergers and acquisitions (M&A), a continuation of the intense M&A activity noted in 2005, which was the hottest year for M&As since 2000. According to one report, global M&A volume increased 38 percent, to $2.9 trillion, in 2005. compared with $2.1 trillion in 2004 (Dealogic 2005). Already in 2006. M&A observers are anticipating more remarkable M&A growth.
The reasons include the relatively low level of interest rates, while hedge funds, other private equity firms and global corporations have high levels of cash on their balance sheets, spurring the urge to merge. But there is a great deal more to making a transaction successful than having the financial resources to strike a deal. There is a growing recognition that the integration of people and the programs that support people is critical to achieving the anticipated results of a merger or acquisition, and a few forward-thinking firms are addressing that issue. In fact, they are breaking new ground and taking full advantage of the "downtime" between regulatory filing and the close of the deal by deploying "clean teams" to accelerate the speed and dramatically increase the quality of integration planning.
A clean team is a group of individuals - operating under certain protocols and prior to regulatory approval or consummation of the deal- who assemble, review and analyze sensitive, competitive and other confidential data. The team is most effective during the period between when a transaction is first being negotiated to when final documents are complete and regulation approval is achieved. Many integration issues - at a detailed level that neither party to the transaction can legally work - can be assessed and planned with the team. The team's value to merging organizations can be measured in the hundreds of millions of dollars. HR leaders, corporate board members and executive management would do well to consider and seriously discuss the strategic advantage of this approach.
An Uncomfortable Scenario
Indeed, the dean team can be the solution to a familiar business problem: A company has completed a strategic business combination - such as a merger, acquisition or joint venture - but capturing the value of that deal is taking longer than anyone had anticipated. Six months have...