The role of payroll in mergers and acquisitions

The companies spoken to ranged in size from a smaller startup, where payroll managers have broad-ranging responsibilities, to large global corporations where the responsibility of the payroll department are more conventionally defined – and ranged in character from serial acquirers to organisations that have gone through one-off mergers. The respondents recommend global payroll managers take a number of steps to ease the path for future M&A activity, including:

Make senior managers aware of the issues that M&As trigger for payroll, and get payroll a seat at the table. 

As a downstream function, payroll’s role in M&As is largely reactive, and as a result its interests can be overlooked. The earlier payroll can be involved in the M&A process – subject to confidentiality and regulatory constraints – the better. It is payroll’s responsibility to bring these issues to its acquisition team’s attention – ideally, before a specific deal is under consideration.

Develop a methodology for managing an M&A. 

Advance preparations – including collaboration with other functions and creating a checklist for payroll activities – can help smooth the M&A process.

Research ways to tap into payroll professionals with M&A experience. 

Having access to specialist M&A resources during a transition can help head off problems. If you expect your company to be a serial acquirer, consider setting up a dedicated, experienced team.

Tap into the expertise of the acquired company’s team, including any outsourced service providers. 

Even if you do not plan to retain acquired team members, their help will be critical during the transition.

Partner with vendors. 

Develop strategies with vendors for easing the transition.
Be prepared to challenge integration timescales Integration timelines can be challenging and, in practice, will sometimes need to be extended – for example, by keeping on board the acquired in-house team longer than originally planned.