In acquiring a Japanese company, people and organization issues, not just finance and legal, greatly affect success after the deal. It is important to check the state of the people and organization before deciding to acquire.
- The people and organization of the target are not well understood
- It is unclear whether key people will stay after the acquisition
- The differences between the target's organizational culture and the company's own are not visible
- It has not been decided how to handle differences in HR systems and treatment
This article explains the people and organization issues to check before acquiring a Japanese company.
Why People and Organization Issues Affect the Outcome
The value of an acquisition target is often supported by the knowledge and relationships of the people who work there. If key people leave after the acquisition, the value of the business may fall below expectations.
Differences in organizational culture and how decisions are made also affect operations after integration. It is necessary to check people and organization from the stage of considering the acquisition.
Items to Check
As part of due diligence, check people and organization items like the following.
| Item | What to Check |
|---|---|
| Key people | People essential to the business, their roles, and their intention to stay and treatment after acquisition |
| Organizational structure | The org chart, flow of decisions, relations between departments, and between management and the field |
| HR systems and treatment | Pay structure, evaluation system, bonus and retirement benefit systems, and differences from headquarters |
| Labor conditions | Management of working hours and leave, concerns about unpaid wages, labor relations, and employee retention |
| Organizational culture | Ways of working, values, and characteristics of communication |
Check With Post-Acquisition Integration in Mind
Reflect what is found in negotiating the price and terms and in drawing up the integration plan. It is also effective to discuss in advance with the target's management whether key people will continue.
Labor and HR require specialist knowledge. It is advisable to check the risks with support from specialists such as lawyers and labor and social security attorneys.
Summary
- The value of a target rests on its people and organization, which affect success after the deal
- Check key people, organizational structure, HR systems, labor conditions, and culture
- Reflect what is found in negotiating terms and planning integration
- Check labor and HR areas with the support of specialists
Contact
JBN supports foreign companies acquiring Japanese companies, including checking people and organization issues.
To discuss checking people and organization before an acquisition, please contact us.