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5 Ways Global Payroll Can Assist at the Start of an M&A

Breiffni O'Domhnaill
Breiffni O'Domhnaill

Commercial Manager, Immedis

Jan 19, 2021 2 mins

As regularly cited, the failure rate for M&As is quite high- roughly between 70 and 90%. Given such an abysmal rate, it makes sense that companies thinking about merging should beforehand take every precaution to ensure they succeed where so many others have failed.

While the factors for success are numerous, I want to talk about payroll. After all, ensuring all your employees, no matter where they are located or whom they were employed by, is essential. People rely on the smooth transition of payroll operations, and the risk of unhappy employees makes it imperative to get it right from day one.

Top ways global payroll leaders can support in identifying optimization opportunities and risks:

#1 Review and prepare

Document risks and savings opportunities for each of the following:

  • A country-by-country mapping of payroll vendors, systems, pay calendars, and organizational structure
  • All existing HCM and FMS platforms
  • The tax, employment, and data security laws for new countries
  • The entities in each country, their tax registration, and payment methods
  • All current vendor contracts and end dates
  • Risks associated with expansion into new international markets
  • Compensation plans and any inherent risks/legal issues
  • Past fines and penalties
  • Payments to contractors
  • Employee data shared pre-and post-merger and how to ensure it is secure to reduce GDPR risk

#2 Create a roadmap and savings report

Once the review has been completed, develop a roadmap for integration of operations, technology, and vendor review. This should include an estimate of the savings to be made by integrating.

Factors to consider include:

  • organizational structure
  • implementation timelines
  • responsibility for managing the transition
  • calendar reviews
  • new policies far commission on benefits
  • new payment methods
  • communication with staff
  • transition to new policies
  • communications with tax authorities.

#3 Communicate risks before the deal is signed

Payroll leaders should communicate risks to finance professionals before any deal is signed as this may impact the price or be incorporated into the agreement. In addition, payroll can provide insights on cost-savings, which may influence the decision to go ahead with a merger or acquisition.

#4 Determine whether to consolidate or not? 

No two deals are the same, and some organizations may decide to keep each organization separate. Although integrating employees onto one payroll was difficult in the past, today cloud platforms make this process a lot more seamless. A good global payroll solution should have functionality that makes the onboarding process a seamless transition.

#5 Agree on compensation policies 

Document and plan the communication of changes to HR policies and compensation plans. Create a listing of compensation and benefits to perform a gap analysis. Be sure to agree on future HR policies and plan for the incorporation of these changes into payroll.

Typically, when a larger listed company is acquiring a smaller company, the payroll team should assess the inefficiencies and lack of control that may result if such integration is delayed and expenditures that may arise as a result. The need to implement or improve controls, procedures, and policies appropriate for a larger public company at companies that before the acquisition may have lacked such controls

Got any questions? Please reach out to us and discover how we can help you manage your international payroll.

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