Human Resource Due Diligence within the Context of Mergers & Acquisitions

A Mathematical Valuation Model of Human Resources

Master's Thesis , 2004 , 132 Pages , Grade: 1.0

Business economics - Business Management, Corporate Governance

The process of M&A (Mergers & Acquisitions) represents a predominate form of expansion, growth and internationalisation. In the past, M&A research into the strategic fit producing optimal synergies between two corporations has largely focused on the financial, legal and economic aspects of any prospective deal. Only since the increased awareness of a nearly fifty percent failure ratei has there also been growing consciousness of HR’s significance in this equation, together with the cultural aspects of integration strategies, and the cultural factors for globalisation – in other words, the cultural fit!
In global terms, there is increasing acknowledgement and awareness of intellectual capital as a core economic resource, rating the significance of a company’s sum of human capital and intellectual property on a par with physical assets such as equipment, plant and inventories. Empirical evidence suggests that the management of cultural and human factors in a M&A implementation is crucial for smooth integration and overall positive outcome.
The project work discusses, investigates, and reports on research into the essentials of human resource due diligence and its cultural aspects in a cross-border integration. It focuses on human resource management and cultural integration during a M&A phase. It also points out specific findings on integration using and intensive HR due diligence approach. The issues of discussions are based on a wide range of literature supported by findings of empirical studies published internationally and the M&A knowledge of the management staff . The project intends to tackle the contrast between pre-acquisition motives and post-acquisition behaviour, and the subtle process of sound integration in terms of HR due diligence in general cross-border M&A. The work will touch on the measurement approaches of the field of human resource accounting (HRA), specifically the stochastic rewards valuation model for M&A, as a tools for the measurement of the value of the ROI on human capital.
The discussion on cultural integration includes cultural fit, cultural change and management across national cultures in mergers and acquisitions. Addressing these issues is designed to provide further insights for the two companies in question into the significance of HR due diligence in the run-up to any possible merger or an acquisition of ADMECO AG.

Inhaltsverzeichnis

• Abstract
• Preface
  • The company - ADNECO AG
  • Investor - Nordic Medial Supply (NMS) APS
• Introduction
  • Issues & Challenges
  • M&A Facts
    • Cross-border M&A Facts
  • Context of the Study - Issues and Objective
  • Reason for Selecting
  • Outline & Structure of Project
  • Limitation & Focus
    • External Constraints & Conceptual Limitations
    • Research Limitations
  • Terminology
• Literature Review
  • Introduction
  • Merger & Acquisition (M&A)
    • Types of M&A's
    • Phases of M&A
    • Reasons for M&A's
      • Market Synergies
      • Other reasons for M&A
    • Cross-border M&A
      • Cross-Border Challenges
      • Specifics of Cross-Border M&A
    • Cultural Issues
      • Cross-Cultural Differences
      • International M&A's - Cross-Cultural Aspects
      • Success Factors
      • Hofstede's Dimensions of Cultural Variability
    • Human Resources (HR)
      • International HR Management — Impact & Practise
      • HR Impact - Home & Host Country Effect
  • Due Diligence
    • Integration Begins With Due Diligence
    • Human Resource Due Diligence
      • HR Due Diligence in M&A's
      • Value of Human Resources
      • Value of Human Capital
      • Importance for an HR-Checklist
  • Human Resource Accounting (HRA)
    • Parallels With Corporate Evaluation Method
    • The Human Replacement Cost Model
    • Mathematical HRA Models
      • Monetary Valuation Models
        • Flamholtz's Stochastic Rewards Evaluation Model
        • Hermanson Model
        • Lev/Schwartz Compensation Model
      • None-monetary Valuation Models
        • Likert,'Bowers Model
        • Wucknitz Model
        • Fitz-enz's HR Scorecard Model
    • Conclusion
  • Methodology
    • ADMECO and its transformation
    • Objective
    • Data Collection Method & Analysis
      • The Intend
      • Sources of Data
        • Primary Data Collection
        • Secondary Data Collection
      • Measurement Methods
        • Gaining Access — Management
        • Qualitative Approach
        • Selection of Sample
        • Analytical Approach
      • Summary
  • Findings
    • New Monetary HRA Valuation Model
      • Model Description
      • Naming the New Model
      • Valuation of the Model
        • The Valuation Process
        • Service State & Value
        • Valuation Period
        • Mobilio• Probabilities
    • Interpretation of Results
      • Economic Monetary Values — An Overview
      • HRRep1acement cost ADLMECO
      • Appreciation & Problems of the Stochastic Rewards Valuation Process
      • Cross-Border HR Issues
      • Findings on Cultural Issues
    • Conclusion
  • Discussions & Recommendation
    • Discussion / Comments on Available HRA models
      • Stochastic Rewards Evaluation Model
      • Hermanson Model
      • Lev/Schwa1tz Compensation Model
      • Likert' s Model
    • Resurgence of Interest in HRA
    • The New HRA Model
      • The New Model
      • Valuation of the New HRA Model
      • Testing the New HRAMode1 Validity
        • Discussion of the Model
        • Mathematical Statement of the New HRA Model
    • The Other Simplistic Equations on Human Capital
    • The Expen Expertise on M&A
    • Cultural Issues
      • Cultural Awareness and Communications
    • Denmark & Switzerl and
      • Trade Barriers
        • The Communication Barrier
        • The Mental Barrier
        • The Organisational Barrier
    • Recommendations
  • Conclusion
    • Human Resource Accounting Model
      • Future Directions of HRA
    • Cultural Conclusion
    • Cross-Border M&A
    • Communication
    • Final Remark
  • Personal Reflections
  • Bibliography / Appendix / References / Glossary•
    • Bibliography
    • Appendices
      • The Economic Monetaly Value Results
      • Limited DueDi1igence (ADMECO AG)
        • Legal, organisational and o».nership structure of the business
        • General and Contractual Matters
        • Accounting controls and Policies
          • Oven•iew of the Accounting Policies & Controls
        • Financial Statement Information
        • Historical Operating- Information
        • Historical Balance Sheet Information
        • Forecasted F inancial Statements
        • Management mformation System
        • Risk Marlagement
        • Human Resources
        • Taxes
      • HRDueDi1igence Checklist
      • Aspects by Counüy
        • Switzerland
          • General Aspects
          • Economic Data
          • M&A Legislation Over-view
            • Introductory Comments
            • Corporate Structures
            • Letters of Intent and Heads of Agreement
            • Liability for Pre-acquisition Trading and Contracts
            • Employee SuperannuatiowPension Plans
            • Employee Rights
            • Compulsory Transfer of Employees
            • Otherlssues
            • Swiss Merger Law
              • Employee Protection
              • Cross-Border Mergers
              • Creditor and Employee Protection
        • Denmark
          • General Aspects
          • Economic Data
          • M&A Legislation Over-view
            • Corporate Structure
            • Extent of Seller's Warranties and Indemnities
            • Liability for Pre-contractual Representations
            • Employee SuperannuatiowPension Plans
            • Employee Rights
            • Compulsory Transfer of Employees
      • Commercially Available HRA Software's
      • Glossary
      • References

• College: University of Strathclyde
• Grade: 1.0
• Author: MBA Andreas Keller (Author)
• Publication Year: 2004
• Pages: 132
• Catalog Number: V178455
• ISBN (eBook): 9783656006909
• ISBN (Book): 9783656007401
• Language: English
• Tags: human, resource, diligence, context, mergers, acquisitions, mathematical, valuation, model, human, resources