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The Merger and Acquisition Fallout – Who Should Stay or Go?

According to Andrew R. Brownstein of Watchell, Lipton, Rosen & Katz, 2015 global mergers and acquisitions (M&As) hit an all-time high with the United States contributing to nearly half of the $5 trillion.  The United States economic outlook was more stable as companies continued to reduce costs and minimally retain comfortable revenue margins, thereby created many opportunities for friendly, hostile, and unsolicited M&As with additional company spinoffs.  However, the fallout of these ventures inevitably result in a change of direction for the vision of the new company with a mandate to modify the employment staff.  Leaders have to determine who should stay and who should be offered a package to leave in peace.


When a corporation pours multi-million dollar investments into another company that has unique assets (the acquired), this is considered an acquisition.  The new leadership team should include a few people from the acquired company for a short period of time to ensure a smooth transition.  This timeframe enables the acquiring parent company to obtain as much knowledge to proceed without interruption with no reliance on the acquired company’s employment sources.  Professional sports teams are the best and simplest examples of acquisitions.  A new General Manager (GM) takes the helm and releases all the staff brought in by the previous leader and hires his own loyal crew to work hard and protect his best interest.  In this case a transition is not required because the skills between the two regimes are transferable and easily replaceable. 

Many employees who don’t want to face the reality of a take-over mistakenly call an acquisition a merger.  A merger is when two companies combine similar resources, methodology, and practices to create a uniform direction and provide an almost equal blend of assets, capital, inventory, customer base.   If one company provided or purchased billions of dollars in another company’s stock, it is an acquisition not a merger.  If two companies provided nearly half of the funds and resources to formulate one company, it can be considered a merger.

Nonetheless, deciding who to keep is based on three factors: 1) loyalty analysis, 2) influence and 3) impact to revenue. 

Loyalty. Loyalty analysis is a complete review of whom and what the employer is dedicated.  This can be a specific person in charge or existing processes in place.  If someone is dedicated to the old processes and blocks the implementation of new processes, remains defiant with the new leadership and complains about conforming to existing staff, or does not want to assist or work on teams with the new regime, a package should be created to encourage the employee to leave.

Influence.  The influence of an executive or manager must be accounted for when creating the direction of the new company.  When a company is acquired, normally the CEO of the acquired company already has a buyout package and is retained a few months to persuade his old subordinates that the holding company’s executives have tremendous strengths in growing the company, the new direction is best for the company, and their career paths will skyrocket in the industry because of the corporate change.  While this is normally an untruth, the parent company uses the influence to their advantage to involuntarily solicit as much buy-in as possible to gain the knowledge to release the maximum amount of people in non-crucial areas.  In an assessment on which management to keep, the influence to turn people in the new direction is key in keeping them employed.

Revenue Impact. Identifying which employees’ work contribute to the bottom line provides a purview into the areas of the company that should not be disrupted.  If a manager and his subordinates are helping to create new profitable solutions on time, in budget and with the existing number of resources, he is a keeper.  If the role requires research or completing mundane tasks that do not feed into revenue increase, a package can be created to remove these low-hanging fruit.


With these three assessments, these tips should help answer the question – to be or not to be employed.

 
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