Mergers & Acquisitions. How We Can Help

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1 Mergers & Acquisitions How We Can Help

2 HR DUE DILIGENCE SUPPORT Let us help you navigate the road blocks. HR Issues to Address During Due Diligence Compensation Employment Practices/Provisions Benefits Staffing & Selection Base Salary Variable Pay Plan Documents Sales Plan Documents Employee Equity Plan Documents Director Equity Plan Documents Visas Policies (vacation, severance, etc.) Years of Service Credit FLSA Employment/Change in Control Agreements Types of benefits provided Employee/Employer Cost Supplemental retirement programs List of pending or threatened litigation Organization Charts Employee Mapping Redundancies The main objective of due diligence is to identify potential deal breakers and/or any factors requiring adjustment to purchase price or deal terms.

3 RETAINING KEY TALENT Many acquiring companies pay significant retention bonuses. Linking the reward to integration goals is a critical step that is sometimes overlooked. We can help you develop a retention plan that addresses the following: Criticality Retention Period Award Size Award Type Funding Payment Timing define the individual s importance to the business both during the transition and beyond. Knowing how long you want key employees to stay (i.e. their retention time horizon ) and understanding what might be motivating them to go, are prerequisites for designing effective retention packages. While you may want to keep some employees indefinitely, others may only be needed for a limited time. The ideal retention payment should be big enough to make staying worthwhile to the employee, but affordable and justifiable for the company. The target award can be a set amount or one that increases as performance hurdles are met. Awards should be based on comparative benchmarking data and market practice. A retention payment is typically paid in cash, equity, or some combination of the two. Most often, the type of the award used is driven by the criticality and retention time horizon of the person being retained. Retention packages can be immediately funded when earned or paid from a performance based pool whose size varies with the achievement of specific performance goals such as the timely achievement of integration milestones. If the goal is to retain the employee for extended periods of time, pay the award in installments over the retention period, or backload the payments so that more is paid at the end of the period.

4 HR POLICY AND PLAN ALIGNMENT Establish a policy handbook with the goals and objectives of the merged company. One of the most overlooked advantages of a deal is the opportunity to overhaul outdated people-related policies, plans and practices. A merger or acquisition provides a temporary shield for altering structure, redesigning roles, reassigning employees and reconfiguring people processes and systems. Policy Examples Vacation/PTO Sick Time/Medical Leave Flextime Maternity/Paternity Leave Severance Car Allowance Travel L&A will create a policy handbook with legal, regulatory and best practice standards. We can also quantify the impact of before and after.

5 L&A CAN HELP The broad purpose of any M&A deal is: Growth from acquiring new products, markets and customers Increased profitability based on strategic potential of the deal Let Longnecker & Associates put you on the road to success and help you achieve your M&A goals with our tools and resources. Longnecker & Associates Longnecker.com Jones Road, Suite 200 Houston, TX STRATEGY. GOVERNANCE. COMPENSATION.