Redesigning the Due Diligence Model-focusing on the human part is indispensable for success in international M&A

Abstract

This dissertation presents the critics of a successful due diligence and thus difficulties

of a well done merger or acquisition as well as where there should be more attention

in order to conduct a successful M&A. In the field of M&A, many studies have

concluded that after the deal most of the time the shareholder value will decrease

rather than increase. Due to that the critics of a successful due diligence and thus

difficulties of a well performed merger or acquisition will be discussed as well as

where there should be a higher attention in order to conduct a successful M&A. It is

assessed that during the due diligence process most focus is on the financial, legal

and commercial issues. Also the part of the human resources is mostly just focused

on the legal and financial items. Since the future performance of the combined

company has a high connection to the employed staff, this dissertation focuses on

the human and cultural side of a due diligence. It is investigated what managers have

to be aware of, how communication and integration of employees should be

managed as well as the combination of different cultures. Therefore we developed an

altered human recourse due diligence model. In that it is explained how we think a

human due diligence should be prepared and what has to be included. Furthermore it

is explained how the integration of humans and their culture can be fulfilled and what

has to receive attention.

In the analysis a survey of consultants is presented which shows how far companies

already think about the mentioned issues as well how the respondents believe that

an altered human resources due diligence model will be more useful for successin

M&A transactions.