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No merger or acquisition should take place without both companies checking out the policies, standards, corporate histories and personnel – especially senior officers – of the other.
No merger or acquisition takes place without the extensive involvement of lawyers, accountants and other business professionals.
Yet one thing often overlooked, and which comes back to haunt either the acquirer or the newly merged entity, is the fact that one company, usually the smaller or less successful one, had low or non-existent security, compliance and due diligence standards.
G2 has worked cases in which some of the most prominent and successful companies in their fields acquired smaller companies without reviewing the acquired company’s human resource policies. Thus, the acquirer was, often unknowingly, suddenly employing personnel with criminal backgrounds or who did not meet the standards the acquirer set for its own personnel.
Furthermore, because it often takes six months to a year before a merger or acquisition becomes “seamless,” within that time frame all kinds of damage can occur from lack of due diligence. Employees with less than savory backgrounds suddenly see new opportunities now that they work for deeper pockets.
In one case, during the course of a routine investigation about another matter, G2 found that a shipping clerk, who came to work for a large company through an acquisition, had criminal convictions and had served jail time for stealing from a previous employer.
Companies, like people, can also have hidden, troubled histories. No merger or acquisition should take place without both companies checking out the policies, standards, corporate histories and personnel – especially senior officers – of the other.
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