About 75% of all mergers and acquisitions do not meet the expectations. The only way to influence their success is with and by people, and by emphasizing success factors and avoiding barriers.

Indian companies increasingly use Mergers and Acquisitions (M&As) to realize their strategic goals. Last year, they had been involved in almost 1,400 transactions with a value of $59 bn (See Figure 1). Cross-border deals are very important and make up half of all deals. While acquisitions by the Indian companies abroad make up only 17%, foreign companies are much more acquisitive in India with 32% of all deals. It is an important fact that Indian companies increasingly use M&A transactions to grow international or even globally. The most popular destination for acquisitions abroad by Indian companies in 2007 was the US. Other preferred destinations were the UK, Australia and Germany. The most frequent buyers in India come from the US accounting for almost one third of all transactions. In total, most M&A deals with Indian parties involved were done in the financial sector followed by high technology and industrial sectors .

A thorough human capital due diligence is an important cornerstone for laying the foundation of a successful deal. The due diligence, when the target company or merger partner is analyzed for risks and opportunities, offers a chance to learn in detail about the other party and to prepare for the integration phase ahead. If this due diligence is done the right way, it greatly increases the chances of success. The human capital due diligence is only a part of the overall due diligence which also includes a financial, commercial/operational and legal due diligence. Components to be analyzed as part of the human capital due diligence are: talent, organizational design, workforce, remuneration and industrial relations (See Figure 1). All these components and their respective depths of analysis will vary from case to case, during the M&A process and the likelihood of closing the deal. The results of the human capital due diligence show which risks and opportunities with regard to human capital are realistic. All findings have to be translated into financial numbers and cash flows to demonstrate their effect on the valuation and business model.

HRM Review Magazine, Mergers and Acquisitions, Strategic Goals, Indian Companies, M&A Transactions, Industrial Sectors, Organizational Design, Cultural Factors, Top Management, Decision-making Processes, Capital Markets.