As an organizational strategist, I pride myself on my ability to assess the health of an organization beyond the income statement. I typically know where to look for warning signs that an organization is poised for human capital challenges.
I continue to be shocked at the number deals done without a decent assessment of the health of the entity being purchased or invested in. We don't buy a house without an inspection. We don't buy a car without checking it out mechanically. We can't even buy life insurance without a battery of tests and questions to evaluate our health risk. Why are so many corporate transactions done without the equivalent human capital assessment?
I'm not suggesting that deals be called off for organizational concerns, but why not go into them with eyes open, understanding the challenges and issues that will need to be addressed in integration?
We recommend a parallel Human Capital/Organizational DD process to run alongside traditional DD processes that will provide insights into this important area. If nothing else, it may highlight some risk or at lease cause adjustments in synergy estimates.