Understanding People — The Hidden Multiplier in M&A Success

Why Harvard's Latest Research Validates a Revolutionary Approach to M&A Due Diligence

When Harvard Business Review unveiled groundbreaking research about workplace connections this month, it exposed a critical blind spot in how organizations approach human capital - particularly during mergers and acquisitions. The research reveals that workplace connections aren't simply about colleague interactions, but rather a complex web of four distinct relationships that directly impact business performance.

This insight comes at a crucial time. With M&A activity projected to increase in 2024, dealmakers face a stark reality: up to 70% of deals fail to meet their expected value, with human capital issues frequently cited as the primary culprit. The research's CLEAR framework (Colleague, Leader, Employer, and Role connections) illuminates why traditional due diligence often falls short.

"Understanding people isn't just about headcount and organizational charts," explains Bold Genesis, a specialized M&A advisory firm. "It's about comprehending the intricate network of connections that drive business performance." This perspective has become increasingly valuable as companies navigate complex integrations in a hybrid work environment.

The HBR research validates Bold Genesis's evidence-based approach to human capital in M&A. Their proprietary assessment methods go beyond surface-level analysis to examine all four connection dimensions that impact deal success:

• Leadership connections, which account for 70% of team engagement

• Employer connections that influence talent retention and attraction

• Role connections that drive productivity and innovation

• Colleague connections that affect collaboration and culture

For private equity firms and strategic buyers, this multidimensional understanding translates into tangible deal value. Bold Genesis's clients report significantly higher success rates in post-merger integration, with some achieving synergy targets up to 40% faster than industry averages.

"Traditional due diligence often misses these crucial connection points," notes a managing partner at a leading private equity firm. "Bold Genesis's approach helped us identify risks we would have otherwise missed and opportunities we might have overlooked."

This depth of understanding proves particularly valuable during critical deal phases. When a mid-market technology company recently faced unexpected attrition during integration, Bold Genesis's analysis revealed that while colleague connections remained strong, leader and role connections had severely deteriorated. This insight enabled targeted interventions that preserved key talent and protected deal value.

The firm's methodology also illuminates opportunities that traditional due diligence might miss. In one recent acquisition, their analysis identified strong employer and role connections among middle management - an untapped source of value that became central to the integration strategy. This discovery not only accelerated synergy realization but also led to innovative operational improvements driven by previously overlooked talent.

Another telling example emerged in a cross-border merger where surface-level cultural assessments suggested high compatibility. Bold Genesis's deeper analysis of connection patterns revealed potential friction points in leadership styles and role expectations that could have derailed integration. This early insight allowed for preemptive action, saving millions in potential lost productivity and retention costs.

As the M&A landscape evolves, understanding people - in all their complexity - has become a critical differentiator. Bold Genesis's approach, now validated by Harvard's research, offers dealmakers a powerful tool for unlocking transaction value through deeper human capital insights.

For decision-makers in M&A, the message is clear: in a world where most deals fail to deliver expected value, understanding people isn't just another checkbox - it's the hidden multiplier that can determine success or failure.