Case Study: HR Reporting During a Private Equity Transaction

Overview

A 250-employee SaaS company was being reviewed by a Private Equity form. This deal was a majority recapitalization by a mid-market PE firm. At each stage of the pre-transaction process, reporting was needed around the employees.

Stage 1: Initial Evaluation / Deal Sourcing

At this stage, we wanted to provide high-level insight into leadership and workforce structure. The following reports were pulled from UKG, the company’s HRIS): org chart, executive bios and roles, headcount snapshot. This included pulling information on total FTE count, key leadership names and positions, and a high level summary of headcount by departments and locations.

Stage 2: Preliminary Due Diligence (Pre-LOI)

Prior to the letter of intent, the goal was to assess talent health, retention risks, and comp strategy. Using the historical data in UKG, we pulled information for turnover over the last 24 months. We also pulled compensation summaries with salary history over the last 3 years. We compared salaries over each year and the percent increase as well as promotions. By pulling new hire reporting and termination information, we were easily able to report hiring trends and common reasons for leaving to help identify any potential risks. Using these reports, the Private Equity firm was able to review turnover against industry benchmarks and view a breakdown of the roles added over time as the company grew. They were able to rule out high attrition in several departments being a potential liability because of the turnover data provided.

Stage 3: Full Due Diligence (Post-LOI)

The full due diligence is lots of reporting to provide full transparency into comp, benefits, and employment risks. The full employee census was exported from UKG to include basic job information and demographics. This report was continuously added to throughout the project as more information was needed over time to dive into the data and specifics more by employees, departments, and teams. InteGreat Solutions had full access to the virtual data room (VDR) to upload the reporting. Additionally InteGreat Solutions was able to download employment contracts and IP (Intellectual Property) compliance documents from UKG to upload into the VDR. We heavily used the benefits admin module to extract plan documents, eligibility information, and report on costs. Other reporting for EEOC information was added to the VDR from the HRIS to report on demographics metrics by role, department, location, and team. This reporting allowed for the PE firm to identify one executive who had a larger than normal severance package and did not sign the non-compete agreement.

Stage 4: Pre-Close / Integration Planning

We assisted with the reporting to review to plan for Day 1 continuity, retention, and post-close org design. Reporting was downloaded to include talent and performance information, tenure, and other potential flags on each employee. This helped identify any flight risks, key people, and where synergies occurred.

Key Takeaways

With UKG, the HRIS, being the single source of truth for people data at every stage, it was important to have clean data upfront. The pulling of reports by InteGreat Solutions prevented missteps during diligence. The reporting also assisted with the QofE (Quality of Earnings) and answering the questions that followed the review. Custom fields and tags in UKG helped track special agreements, reasonable accommodations, and bonus structures. The ability to deliver accurate, structured data built trust with the PE firm and helped secure a better valuation.