Payroll plays a major role in helping manage the execution of mergers and acquisitions (M&A), but the issues it faces are not always understood elsewhere in the organization, particularly in international deals. This Briefing Paper provides insights into how payroll functions within different multinationals prepare for and manage the impact of M&As, from their highlevel strategy to the kinds of checklists they deploy.
Webster Buchanan Research spoke to global payroll managers with M&A experience at seven multinationals to gauge their experiences. They ranged in size from a smaller start-up where payroll has broad-ranging responsibilities, to large global corporations where payroll’s responsibilities are more conventionally defined – and ranged in character from serial acquirers to organizations that have gone through one-off mergers. The respondents – predominantly drawn from Webster Buchanan’s Global Payroll Research Network1 - recommend global payroll managers take a number of steps to ease the path for future M&A activity including:
- Make senior managers aware of the issues that M&As trigger for payroll, and get payroll a seat at the table As a downstream function, payroll’s role in M&As is largely reactive, and as a result its interests can be overlooked. The earlier payroll can be involved in the M&A process – subject to confidentiality and regulatory constraints – the better. It is payroll’s responsibility to bring these issues to its acquisition team’s attention – ideally, before a specific deal is under consideration
- Develop a methodology for managing an M&A Advance preparations – including collaboration with other functions and creating a checklist for payroll activities – can help smooth the M&A process. A sample set of milestones is provided in Part 1.4
- Research ways to tap into payroll professionals with M&A experience. Having access to specialist M&A resources during a transition can help head off problems. If you expect your company to be a serial acquirer consider setting up a dedicated, experienced team
- Tap into the expertise of the acquired company’s team, including any outsourced service providers. Even if you do not plan to retain acquired team members, their help will be critical during the transition
- Partner with vendors. Strategies for easing the transition from a vendor perspective are covered in Part 2.2
- Be prepared to challenge integration timescales. Integration timelines can be challenging and in practice will sometimes need to be extended – for example, by keeping onboard the acquired in-house team longer than originally planned.
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