One of the most important factors in any acquisition event is what happens once the deal closes. Although this may sound obvious and simplistic, the reality is the more planning you do with the buyer in advance of integrating all facets of the business, the better the odds of a winning combination after the deal closes.
Although this is important in all aspects of operations, perhaps it is most vital in the area of key employee retention. No matter how asset intensive your business may be, at the end of the day, the key treasure that any buyer is acquiring are the skilled associates on your team; their experience, longevity, creativity, knowledge, and dedication have been vital to your business’ success, and the success the buyer hopes to build on.
So how can you go about helping to retain these vital intangible assets once the deal closes?
Recently Insperity, one of the country’s most comprehensive HR service providers, published a really notable article on this important topic. Entitled, “Mergers and Acquisitions: How to Keep Employees from Leaving,” it was full of great information that I thought would be really helpful to many of you that are in the process of a transition to a new owner.
One of the most important concepts that they discuss (that we also suggest to our clients) is to make the concept of key employee retention part of your overall due diligence process. This is how Insperity describes it:
The usual due diligence explores the financials, processes and assets of a company, but to keep key employees, it’s important you widen your due diligence umbrella to include:
Integration planning: A process for including key stakeholders in the decisions for how the companies will be merged.
Communications planning: How and when the merger and any changes will be communicated to key stakeholders, including different levels of employees, shareholders and customers.
Organizational alignment: Implications of any changes required by the merger.
This more complete form of due diligence will give you the information you need to make more fully informed decisions about the merger, as well as communicate more accurately with employees.
Although in some cases it is impossible to communicate even with key employees prior to a transaction closing, where it is possible, bringing key employees in as early as conceivable is vital, and outlining how and when to do that during due diligence is a must.
The last bullet point above is probably the most important: No two corporate cultures are alike. As you get to know the buyer, his or her philosophy of management, and see how they lead and operate, it is critical that you compare that template to your company. Does it match? If not, how can you as the seller communicate to the buyer how the organizations need to mesh?
During due diligence, be sure to do as much due diligence on your buyer as they are doing on your organization!
Human beings are creatures of habit and this is just as true inside the workplace as outside (if not more so). Many of your key employees have probably been with you for 20-30 years and are used to a standard routine/management style/policies and procedures.
Although none of these may change at all post-integration, odds are good that the rumor mill will suggest otherwise, making it critical that you get out in front of the “water cooler gossip” with information about the deal and its impact on key employees as soon as possible.
Employees’ most immediate concerns will usually focus on pay, benefits, schedules and location of their work and should be addressed as quickly and fully as possible. It’s helpful to build a central location to announce merger news, receive questions and post answers to the most common questions. This usually takes the form of an intranet section or blog.
While your intranet pages are a start, make sure line managers also have the tools they need to answer the questions they’re sure to get. Encourage managers to frequently check in with their teams to keep an eye out for negativity and rumors that need to be addressed.
However, avoid making announcements too early. For example, you don’t want to say that no locations will close and have to backtrack later. This is where pre-merger due diligence comes into play.
Plan your communications ahead of time and make those communications fit your company’s cultural norms.
I have highlighted a couple of key sections from this segment to point out, based on our collective experience, how important it is to keep ahead of the rumor mill. We have found that fictitious information will arise to fill any communication gaps that you may have as you go through your integration and even pre-integration phases.
Nothing can destroy your integration plans quicker than false and erroneous rumors because sadly, many employees are prone to believe them. So stay ahead of the curve and at least with your key employees, share as much as you can, as early and often as you can.
And the second point is this: Don’t make the mistake of discussing the integration of your key employees with the buyer until after due diligence is over. As stated earlier, if the buyer doesn’t suggest it, point out that coming up with a plan of communication and integration of your key people is vital to start during due diligence.
As I read through the tremendously helpful article from Insperity, it reminded me of how important it is for you to hire an experienced investment bank to guide you on your exit journey. Post-merger integration discussions are just one part of the tremendously challenging process that selling a business creates.
Having a skilled, experienced professional M&A advisor by your side can make all the difference in the world in not only helping you to find a buyer, but close an optimal deal that keeps the business thriving in your absence (and retains your key associates).
Fortunately, Generational Equity and its team of seasoned, skilled dealmakers are here to help. Our team collectively has decades and decades of successful experience in helping business owners achieve their financial dreams. Our role is not one we take lightly. We know that entrepreneurs are the lifeblood of not only our economy, but our society as a whole.
Generational Equity was born long ago with one concept in mind: To bring Wall Street methodologies to Main Street. We have been highly successful in doing that and would love the opportunity to meet with you to do the same. If you are interested in learning more, please use the following links:
And special thanks to our friends at Insperity for creating such a thoughtful and useful article on post-merger integration.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2019 Generational Equity, LLC All Rights Reserved
The information we learn from customers helps us personalize and continually improve your experience at gencm.com. Here are the types of information we gather.
Information You Give Us: We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice. Our computer system protects personal information using advanced firewall technology.
Information from Other Sources: For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Capital Markets LLC may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Capital Markets, L.L.C. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Capital Markets LLC at is office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
INFORMATION ON THIS WEB SITE IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Capital Markets may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Capital Markets does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Capital Markets will be deemed NOT to be confidential. By sending Generational Capital Markets any information or material, you grant Generational Capital Markets an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Capital Markets is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Information Generational Capital Markets publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Capital Markets intends to announce such products, programs or services in your country. Consult a Generational Capital Markets representative for information regarding the products, programs and services which may be available to you.
Generational Capital Markets makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Capital Markets web site, please understand that it is independent from Generational Capital Markets, and that Generational Capital Markets has no control over the content on that web site. In addition, a link to a non-Generational Capital Markets web site does not mean that Generational Capital Markets endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Capital Markets BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Capital Markets.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.