What type of HR M&A advisory firm will best suit your needs?

Deciding which HR M&A advisor to choose to help with your next transaction can be challenging. With so many consulting companies and several types of deals, how can you choose the right advisor for your company’s needs? At first glance, most HR M&A consulting firms appear similar in their offerings and approach. Yet each has distinct areas of specialty to support clients in transactions. To help guide you, the following outlines the strengths and limitations of the common types of firms that offer HR M&A services.

Accounting firms for M&A transactions

Strengths:

• Accounting firms bring a breadth of HR knowledge, enabling them to provide broad support across due diligence and integration/separation activities.
• They are well-suited for broad M&A advisory across multiple functions and are particularly effective in identifying and mitigating cross-functional interdependencies.
• HR consultants often come from accounting, tax and legal backgrounds, which can be helpful in many M&A activities (e.g., aspects of due diligence, Section 280G analysis, employment transfers).

Limitations:

• They lack a global approach to M&A services due to being a partnership network of operationally independent firms across countries and regions. On global deals, this can result in country-specific matters being handled by siloed teams without local expertise.
• These firms often rely on clients’ internal teams or vendors for areas requiring specialized or local HR expertise, which can become an issue when the client doesn’t have adequate bandwidth or M&A experience.

Law firms for M&A transactions

Strengths:

• Deep legal expertise and ability to provide risk-averting legal advice on M&A matters.
• Strong due diligence capabilities in HR-related areas (e.g., employment law compliance, labor relations, executive compensation arrangements, contractual analysis, litigation and disputes).
• Ability to conduct legal due diligence as a stand-alone or integrated process alongside HR due diligence, incorporating legal aspects beyond HR.

Limitations:

• A narrower focus on legal aspects of HR due diligence, which does not typically include a comprehensive analysis of key HR topics (e.g., culture, DEI, total rewards, systems, operating model, workforce and talent).
• Unable to lead integration/separation planning and execution, requiring a different advisor. This can result in significant time losses as the new advisor must learn deal requirements, review due diligence documents, and tailor approach and plans accordingly.
• Similar to accounting firms, they may rely on partnership networks to deliver global projects, and experiences can vary by market.

HR advisory firms for M&A transactions

Strengths:

• Breadth and depth of HR M&A knowledge, enabling broad support while also leading many sub-functional HR workstream activities across all deal phases.
• Operate as one firm with HR M&A consultants in most markets, enabling clients to leverage local expertise as a core offering.
• HR consultants often have benefits, compensation and retirement backgrounds – and many are actuaries – which can be helpful in several M&A activities (e.g., total rewards strategy, side-by-sides, costing of programs, program harmonization and implementation, pension risk assessments, executive compensation analyses).

Limitations:

• Inability to perform comprehensive due diligence beyond HR and some finance-related matters, and usually unable to operate as the cross-functional integration/separation project manager.
• While able to provide commentary on legal or tax topics, these firms do not provide legal or tax advice.

The takeaway

It is imperative to carefully evaluate your needs, understand the unique strengths of each firm type, and select an advisor that aligns with both your project and the broader strategic vision. Making an informed decision could be the difference between an M&A transaction that merely gets over the line and one that propels your organization forward to new heights of success.