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| 2 minutes read

HR in M&A - Introducing the Talent Audit & Retention Office

Any M&A practitioner will tell you that complexity always surrounds a deal irrespective of the size, scope, or industry it involves. In the midst of all the hustle and bustle of a transaction - critical talent can be identified too late in the process to be successfully retained. This has serious ramifications for NewCo, an exodus of knowledge and experience can doom successful integrations and realizing hypothesized synergies. We recommend standing up a Talent Audit & Retention Office (TARO) to help mitigate these risks and retain the best people. 

As the talent command center, the TARO is responsible for guiding HR and other leaders involved in the selection process in how they manage organizational anxiety around potential head-count reductions. This includes instructing managers and job candidates on the interview and selection steps and timelines and coordinating with the communications team of the central integration management office (IMO), where appropriate, on responses to questions about the process. The TARO also ensures that the employee choices align with the new organization’s strategy, desired culture, and synergy objectives related to employees and that the selection and retention processes adhere to the established principles and other guidelines.

Tactically, the TARO is usually composed of senior HR & business unit leaders, ideally working in close coordination with target company leaders to exploit all available early talent interactions during due diligence (along with third-party assistance from firms like AlixPartners) to inform their talent audit. Using an agreed-on set of accountabilities and critical skill needs - the TARO focuses on what key individuals can contribute to the hypothesized future state of NewCo and its ability to rapidly create value. Following a comprehensive audit and finalized inventory of critical talent - the TARO then generates retention plans for review by company leadership, Finance, and the M&A team. 

In the illustrative example above - the TARO identifies four talent retention categories: long-term talent in a key function, short-term talent in a key function, senior long-term talent not in a key function, junior long-term talent not in a key function. The TARO can shift these employees in and out of these categories depending on changing talent priorities for the future state of NewCo.

A TARO can be particularly valuable during large employee reorganizations driven by ambitious synergy targets and undertaken within short time frames. It can also play a vital role in ensuring exits happen quickly when one or both of the merging companies operate in different geographies or industries with complex labor laws or strong union relationships. 

It's still a hot labor market, and critical talent leakage is the last thing that companies want to experience while pursuing a transaction. Consider instituting a TARO (or even better, inquire with AlixPartners about support in setting one up) for that next transaction. 

The TARO ensures that employee choices align with the new organization’s strategy, desired culture, and synergy objectives


m&a, private equity, talent, hr