Clean Team for Merger Integration

A Clean (Team) Start On Merger Integration
The Clean Team: An Emerging Tool For M&A Success
By: John Koob Mercer Human Resource Consulting, Atlanta, GA

WorldatWork Journal - Vol. 15, No. 3, Pgs. 24-31


New tool for speedier integration. With M&A activity on the upswing, dealmakers are under increasing pressure to integrate the two companies as quickly and smoothly as possible. Good integration planning can spell the difference between a merger's success or failure.


To address the integration issues likely to arise after a merger, progressive companies field a clean team. (The name, explains HR consultant John Koob, comes from the computer and health sciences label for a designated work environment that is sealed off to prevent contamination.) The members collect, review, and assess confidential data after regulatory filing and before deal closing, a downtime that can span several months.

Unlike the due diligence process, which focuses mainly on the acquiror gathering financial information, the clean team is a collaborative effort focused on integration planning. Teams generally contain current or former employees and third-party experts such as accountants, consultants, or actuaries.

How to clean up dirty problems. Identifying key issues that are likely to emerge and recommending possible courses of action, clean teams give dealmakers a jump on stumbling blocks (e.g., differences in corporate culture or incompatible compensation and benefit plans) that often thwart or slow down successful integration. Doing so can shorten the time and enhance the quality of integration planning, while avoiding the problems associated with delayed rationalization of compensation and retirement plans.

The team's contribution to the new organization can translate into savings of several hundred million dollars, the author notes.

Two large industry leaders used a clean team when they formed a joint venture in 2004, creating the world's second largest producer of a particular product. They contracted with a consulting team to evaluate and analyze the venture's HR aspects. To avoid violating blackout and antitrust regulations, the independent consultants gathered information from the employees of the respective companies but did not disclose one company's information to the other. By implementing the resulting recommendations, the joint venture had decisions in place soon after its official launch, covering benefits, retirement plan design, a new payroll system, and an early retirement program. Other clean teams have identified cultural differences between companies, determined how those differences would affect the integration process, and made plans to accommodate them.

Guidelines for setting up a team.
The author provides guidelines for establishing and operating a successful clean team. For example, have the team leaders report directly to a steering committee of HR and other executive leaders from both entities. Follow clear, structured guidelines that conform with antitrust legislation. Keep sensitive information confidential; provide reports in an aggregated, anonymous format; restrict access to key information to certain personnel; provide complete documentation; and maintain all data and documents from both parties in distinct libraries. Restrict the target's personnel from seeing confidential information about the acquiror's operations or business.