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Our Bureau

According to the survey, 59% said they would most likely invest in Asia in the near future as opposed to other regions around the world Leadership assessment identified as critical factor

Bangalore , Aug. 5

Leadership assessment, cultural fit and employee communication are the greatest HR challenges to the success of an M&A (merger and acquisition) activity, says a study by Hewitt Associates.

According to the Mergers and Acquisitions Asia-Pacific Study 2006, 34 per cent of respondents believed leadership assessment is one of the most critical HR factors during any M&A transaction.

Despite this, almost half of all respondents said they still only had a rudimentary process for leadership assessment that relies on candidate interviews and the review of personnel files compared to leadership selection in "normal" business situations.

Cultural fit emerged as the top HR integration issue in terms of importance and complexity during an M&A deal.

Cultural Integration

And 52 per cent of respondents indicated that they did not plan for or believe that cultural integration would take more than six months.

Only 13 per cent of all survey respondents said they had formal cultural integration assessment processes in place, but most respondents said cultural fit would obtain significantly more attention in both due diligence and integration efforts in the future.

The Mergers and Acquisitions Asia Pacific Study 2006 confirms the region will continue to see an increase in M&A activity in coming years, with many companies looking to expand their market share in Asia's rapidly developing economies.

According to survey respondents, 59 per cent said they would most likely invest in Asia in the near future as opposed to other regions around the world, and 44 per cent said they were extremely optimistic about M&A activity in Asia over the next two years.

Study Inputs

Hewitt's Mergers and Acquisitions Asia Pacific Study got inputs from HR and finance executives at 73 publicly-listed and private companies based in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea, and Thailand.

Mr Eric Fiedler, Regional Director of Hewitt Asia said: "The study revealed that many companies are starting to understand the need to address HR issues during both the due diligence and integration phases of any merger, acquisition or joint venture, since the integration of HR plans and policies as well as communication of these changes are the key areas causing problems in completing M&A deals successfully."

More Stories on : Mergers & Acquisitions | Human Resources | Mergers & Acquisitions

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