Jim recently celebrated 25 years with WTW. To commemorate this milestone, he sat down with Amanda Scott, M&A managing director and global leader, to share his experiences and insights into how the focus on HR in M&A has evolved over the years.
Amanda Scott: What initially sparked your interest in M&A?
Jim McKay: I started my career back in 1980 as an actuarial trainee in an insurance company in Edinburgh and moved to the U.S. in 1990 as an international consultant and actuary. That meant working with U.S. multinationals on their global plans and programs primarily focused on retirement and benefits, which included M&A projects.
Eventually, I found my way to Watson Wyatt and the broader world of M&A, encompassing both financial and people perspectives. I found this to be more intriguing and challenging for me. M&A became a driving force in my career.
And I love the learning part of it. Each deal offers continuous learning and personal growth opportunities. And after 25 years, I continue to learn because it’s a necessity. One competitor's quote summarizes the need to continuously learn, “We don’t fire people in our M&A practice because they are incompetent. We do it because they become obsolete. What was a valued skill yesterday becomes a commodity tomorrow.”
Amanda: What pivotal moments or achievements stand out to you as particularly rewarding and impactful?
Jim: Working with serial acquirers is incredibly rewarding — not just on transactions but also as a contributor to their training and development initiatives. The volume of deals serial acquirers get involved in is staggering. For example, for one serial acquirer, we’ve worked on over 500 projects in a 20-year period, spanning large, multi-country complex deals to projects only requiring “over the shoulder” advice. Another client called on us to work on over 50 deals in just one year. The key point being that we’re part of their team and they need a dedicated global M&A team to service them; something WTW excels at. And on many of these sorts of projects, we work shoulder-to-shoulder with competitors. There’s nothing like hearing a competitor talk to clients when you are in the room to keep you on your toes! But that also reinforces the need to continuously learn and improve, because if you are not, someone else is.
Another pivotal moment was the creation of the client roundtables. These were created from our ongoing work with serial acquirers and the desire to learn from each other without the pressure of working on deals. I set them up with the goal of developing a better ongoing relationship with these companies and to develop intellectual capital in conjunction with these clients. They give clients peer-to-peer knowledge sharing in a safe environment, which is important to them given the sensitive and confidential nature of M&A. This year, we’re celebrating our 20th year with the HR M&A Roundtable, so that’s a great endorsement of the value of the group.
Teaching Cornell M.B.A. students about people and culture in M&A for 10 years was particularly rewarding. And not just because of the interaction with students. Working with other instructors from strategy and accounting firms reinforced the need to keep abreast of what other firms do. They all had their own commentary covering leadership, culture, change and communications, illustrating the fact that, when we speak of competitors on the HR space, the competition comes not just from our traditional HR competitors.
Amanda: Has the world of M&A changed over the years, and what key trends or transformations have you seen firsthand?
Jim: The M&A market has undergone significant transformations. Over the years, there’s been a huge rise in the prominence of M&A professionals as a standalone discipline, both internally at clients and at consulting firms. It’s a market full of competitors from big firms covering broad M&A work to niche firms focusing on specific areas and phases.
The industry continues to evolve. The best companies are continuously improving their practices, while others face challenges keeping up. That’s not surprising if you understand that large clients have in-house M&A teams. Those teams do their own post-deal reviews. Also, they are bombarded with best practice advice from strategy firms, accounting firms and HR firms — it’s hard not to improve with such a wealth of consulting firms offering free advice in this area.
The culture trip has been and continues to be fascinating. In the early 2000s, it was all about surveys and tools led by the HR function. But from corporate development’s perspective, there was a weak link to a deal’s goals and risks, or often no link. From about 2010 on, much more work was done to link specific components of culture to specific goals and risks, at each stage of the deal, along with the guiding principle to ruthlessly prioritize, or as one leader said to his HR counterpart, “don’t try to boil the ocean, we can’t do it all.” This topic is now part of the “shifting left” of work in the deal lifecycle — in this case being embedded in the due-diligence phase as a deep part of integration planning, specifically the changes needed to make the deal successful and much more thought on the key people to execute the changes. Today, it’s HR in partnership with corporate development that’s leading the charge; showing culture is an enterprise-wide issue, and not just for the HR domain.
This work with the corporate development function led to the creation of our change and culture roundtable in 2013 to better understand what specific elements of culture support a deal's goal or mitigate risk through each part of the deal life cycle. As one of the founding members, the corporate development leader said, “In our post-deal reviews, we continually conclude that most people and cultural problems are entirely predictable, surface in integration but are rooted in what we did, or did not do, promised or did not promise in due diligence. We need to do a better job earlier, otherwise we’ll just end up repeating the same mistakes.”
Amanda: What challenges have you encountered during your consulting career and how have you overcome them to achieve success?
Jim: One of the key challenges in consulting is keeping a focus on clients amid organizational changes. And that’s something I’ve experienced firsthand. Looking back, I’ve been “acquired” twice, “merged” twice and then, a few years ago, almost acquired again.
People are people and I’m no different. These situations brought about temporary career uncertainties. However, by observing and living through these situations, I’m better able to relate to clients and their personal concerns.
Amanda: Looking ahead, how do you envision the future of the M&A market?
Jim: As long as public companies exist, so will the M&A market. The classic benchmark still exists. Once a company reaches $500 million in revenue, acquisitions become an integral part of its growth plans. At this point, capital becomes easier to raise, so growing by acquisition is often faster than organic growth — both are important and not mutually exclusive. And there are more and more companies passing that $500 million benchmark, so that means more growth in this area.
There will be continued movement – the “shifting left” theme in transactions. Essentially that means more work earlier in the deal, meaning earlier, more meaningful integration planning and a more comprehensive approach to culture, value creation and risk mitigation in parallel with the people and change parts, starting pre-due diligence and followed through in a comprehensive, connected and coordinated way through the whole deal life cycle.
Technology, such as AI, will play a significant role in improving data analysis and work processes. Other technologies like virtual data rooms, social media platforms and virtual meetings have all contributed to changing how we work. None existed when I started.
Amanda: In conclusion, what advice would you offer professionals in this field?
Jim: They will continue to need to develop a broader skill set, including cultivating softer advisory skills to be able to deal with novices and experienced professionals alike. And this is a challenge when working in multi-function, multi-consulting environments. What is a strength of HR such as “collaborating” on the people front can come across as weak and indecisive with the corporate development side, where strategy and numbers will always be the priority. They are seeking your opinion, absent the input from anyone else. It’s not easy to switch between the two, between stating your opinion and being decisive and seeking collaboration to get a broader perspective.
Developing broad-based thinkers, the classic T-shaped consultant who’s a horizontal and vertical thinker, is best. That’s hard. But it’s required in M&A. Well-rounded M&A HR experts who become long term trusted advisors to internal leaders and partners and external clients need to know:
