The Power of People in your M&A Strategy

In the past few months, I have reviewed several acquisition targets for various buyers and as you can imagine staffing has been a hot topic in each deal. Most of the conversation is around the rate of turnover, how many open positions they have and the tactics they are using to recruit new talent.  But one of the most important questions remains, how will they retain staff following the closing of the deal. Unfortunately, this conversation is typically one of the last conversations to happen. 

Retention following a transaction can be difficult as staff have a perceived fear of changes that are on the horizon.  Things like job security, changes in operations, expectations, and role changes and transforming the employee experience in the process. The concerns pile up and may not be addressed or shown by the new management quick enough.  

The relationships between ownership, leadership, and staff can change greatly throughout the acquisition process.  Studies show that 50% to 70% of mergers and acquisitions across industries fail to deliver what was promised, according to employees of the organizations involved in the transactions. When assessing acquisitions of healthcare organizations with 100 or more employees, the same studies indicate 60% to 75% of current employees express dissatisfaction with the outcome.

In most acquisitions I have worked with and witnessed, I find the primary concerns of the owners tend to be focused on revenue, cost reductions, balance sheets and of course projected future earnings. But, for any of these focus areas to succeed, it is dependent on staff.  Our providers (doctors, hygienists, and assistants) are essentially revenue centers, and without them the business will suffer.   

As I coach new investors in the dental space, I find that educating about the current workforce challenges is always a natural discussion.  But this conversation leads into a plan to retain, support, and align the current clinical providers, team, and leadership.

It's important for the seller and buyer to understand the people's side of the business and formulate a comprehensive plan and strategy when an acquisition is under consideration, during the acquisition process, and then post-acquisition. Remember, your clinical providers are your engine, and the DSOs role is to support the clinicians in providing patient care. Without providers there are no patients.  Without patients there are no providers and no revenue.  As you look at acquisitions, take time to consider your human capital.  This is extremely important today in the challenging labor market, but crucial for every deal in the future.  Your ability to attract, retain and support the team will ensure positive returns to all shareholders.

If you are looking to build assumptions around clinical staff and expected performance levels.  Or, if you are looking to  integrate and align your clinical staff with your organizational goals, and create strong processes to ensure performance and retention, please reach out to me.  Heidi@evolvedentaladvisors.com