The Human Factor: Ten tips for surviving an acquisition

What happens after the merger? Here are 10 tips for successful HR integration.

Earlier this year, two of my favorite HR firms were acquired by foreign multinationals. This is bittersweet news, as on the one hand, there’s always that intangible sense of loss when a local business takes on new and remote ownership; while on the other, the acquiring company is oftentimes a leader in its industry and brings exciting new and additional capabilities to bear for employees and clients of the acquired companies.

Having lived through the highs and lows of being acquired multiple times, if it’s helpful to those in charge of making the decisions that will drive integration of the newly merged entities, here are 10 suggestions for ensuring that yours does not fail to deliver on the promise of 1+1=3.

1. Put aside your business models and integration funding formulas

The deal is done, and it is no longer only about numbers, but is now mostly about people. Do not fire everybody in sales and general & administrative functions (such as executives, I.T., finance, and HR) where you appear to have duplication. Get to know the people in the company you’ve acquired and make sure that you have a process for figuring out who the right people are to keep from both the acquiring and acquired companies. If in doubt as to whether it makes sense to keep “surplus” employees per your financial model, err on the side of keeping more of these, if employee and customer feedback suggests that they are key to client and employee engagement and loyalty. Too often, acquiring companies let go someone whose job title may seem insignificant, but who to employees and/or customers, is the key reason that either group sticks around.

2. Don’t forget that you’ve acquired the company for a reason

If you’ve acquired a company, it’s because you see value in its customers, its products & services, and/or its employees. If this is your acquisition thesis and the story you’ve shared around why you did the transaction, then make sure that your actions align with the story. Do not quickly or arbitrarily make changes to defining characteristics of the company’s legend or culture without first taking the time to understand the consequences of any such change. Companies sometimes move to a unified benefits program, offering lower benefits to employees of the acquired company, and/or changes to valued company programs (such as paid sabbaticals). While these may save dollars initially, they have the longer-term effect of causing engaged employees in the acquired company to become less engaged and to be open to employment offers from competitors.

3. Beware of competitors luring away employees

Speaking of competitors, when an acquisition has been announced, employees in both the acquiring and acquired companies are most at risk of being lured away by competitors. The reasons for this are quite simply that: a) change (and an acquisition certainly represents change) creates uncertainty and a fear of job loss in the minds of current employees and b) as soon as the acquisition is made public, competitors view this as an opportunity to source talent that’s more likely to consider moving. So, stay close to your employees – all of them – because it’s never the ones you think will leave you that do.

4. Words matter

If you are the leader of the acquiring company, or the individual writing that leader’s speeches for use with the acquired company’s employees, be ultra-sensitive as to your choice of words. Employees want to know that they matter, that they are being considered, that they are valued by the acquiring company, and that the acquiring company has core values that align perfectly with those of the company being acquired. The latter especially applies to treating employees with respect, fairness, transparency, and integrity. During and after an acquisition, communications are critical. Communicate, communicate, communicate (3 times).

5. Spend money

Although not necessarily part of your acquisition budget, nor in your business modeling, there will be a need to spend some money (or invest, if you like) in initiatives that help employees in both organizations to feel positive about the acquisition, to be excited, and to continue to focus on delivering against the business plan. It can also help to address any hiccups (i.e. unplanned for benefits/bonuses/vacation/etc. pay-outs) that are the right thing to do, and that show that people do matter.

6. Be visible

This is not a time for leaders to disappear. Leaders in both companies should plan on being very visible. Calendars should be freed up completely so that leaders are present and available to meet with and answer employee questions and concerns early on. The first few months after an acquisition are key for employees forming opinions and making decisions as to whether they’re going to stay or leave. You want your employees to stay, reengage, and contribute to the business going forward, so some of the money you spend, from #5 above, will be on travel, to bring leaders and employees together, wherever you do business.

7. Treat departing employees well

It is natural in a situation where two operating businesses come together for there to be some overlap and duplication of effort. For example, an organization with 100 employees and 2 HR staff and an organization with 200 employees and 4 HR staff may only need 5 HR staff for the combined entity. In the event that the acquiring company is letting people go, from either the acquiring or acquired organization, ensure that you treat the departing employees with respect and in keeping with your core values. Employee antennae are on full alert during the aftermath of an acquisition, and all will be monitoring how departing employees are being treated. If there is any feeling that they are being poorly treated, you open up the risk of your most valued employees, fearing an uncertain future and seeing the current poorly handled situation, not waiting around, and jumping ship to your competitors.

8. Secure your staff

Following an acquisition, there are lots of employment related matters to be addressed. What will new employment agreements look like? What changes will occur to bonus, equity, and/or other compensation plans? What employment laws will apply? Existing or parent company jurisdiction? What happens to retirement plans that differ between the two entities? What happens with respect to company paid benefits? It is vital to address these concerns rapidly either with answers that secure staff, or with a visible and bought-into process that explains timelines, milestones, and provides for employee involvement in decisions around future changes. Insensitivity here will again open up employees for considering a career move and play into the hands of your competitors.

9. Show and share your excitement

Congratulations! You’ve just acquired a great company. Tell the world. Share with employees (in addition to your customers) your vision for the future for the unified organization. Enthusiasm is contagious. If employees see actions that align with and support the vision, they will quickly move from the fear, shock, and anger reactions which normally accompany such a change, to excitement, engagement, and actions in support of making the merged entity successful.

10. Be patient, but be decisive

As the old saying goes, Rome wasn’t built in a day. You’ve made this acquisition for the longer term. It’s ok if it takes a bit longer to hear everyone out and make sure that you’re making the right decisions. Listening becomes especially important at the time of an acquisition. Ensure that all voices are heard and that 3 years from now, everyone talks about how great a company you have vs. saying what a horrible waste of money the acquisition represented, with no added value to show for the investment.

This post originally appeared on David Wexler’s LinkedIn blog under the title “The Good, The Bad & The Ugly of Getting Acquired.” We’ve reprinted it here with his permission.

David Wexler

David Wexler is a human capital strategist and executive coach who partners with executives, boards, and colleagues to build market leading organizations. He has worked for FreshBooks, Syncapse, EA Sports, Alias Systems, and may other companies. Currently he runs his own consulting business in Toronto.