So my small (50 employee) privately held company is being acquired by a larger (500 person) corporation, effective tomorrow. The news was just sprung on us yesterday in a company-wide meeting and I’m still processing it. I know that the effects of an acquisition/merger can vary wildly depending on the circumstances, but I thought I would give a few of ours and see if anyone out there has any experience with a similar situation and the plusses/minuses of such scenarios.
-The acquiring company is not in our line of business. They have neither prior experience nor the capacity to do what we do.
-Both the purchasing company and our company are in the general fields of scientific research and service. Neither company produces a product, or manufactures anything.
-The purchasing company is looking to “increase their verticals” (to use a business term) by branching out into other industries which they perceive as having growth potential.
-They have (at least initially) vowed to keep our company as a mostly independent entity, although I’m sure they will have ultimate say on any number of things. They’re also keeping everyone who currently works here.
Based on the above information, I’m not too concerned about the security of our company/jobs going forward. They pretty clearly have nothing to gain by purchasing our company and then shuttering it; it’s not like a competitor looking to harvest a bunch of client contacts and purge the workforce. Still, I thought I would poll the audience, so to speak.
First, it usually takes a while for the acquiring company to digest the new company, and figure out what they really have. To the point where they really know what everybody in the new company does, and whether there are any overlaps in function. That’s at least a few months, and could be a year.
If there are any overlaps, that’s where the danger of layoffs are. It sounds like you aren’t in especially great danger here, and that’s good. Most of the time I was also safe, which is why I got through these situations unscathed most of the time. Typically the worst places are in the finance and accounting offices, because there are almost always overlaps there.
After that it really depends on what the longer term plans are for the acquiring company. If they want to expand your business you are probably going to do fine. If they want to merge it into one of their existing lines you are in more trouble.
There are absolutely zero overlaps between our two companies. We are a research lab that deals with regulatory agencies (most notably the EPA) and their requirements for bringing products to market, whereas they have no experience with such agencies; they merely fulfill the requirements set forth by the customer. Of course, there are some overlaps in terms of finance & accounting, but being such a small company we only have 2 people who fulfill those functions. At most I would think only 1 of them would be at potential risk.
According to what they said in the meeting yesterday (by their CEO and our managing director), they do want to grow our business. They see regulatory work as being a growing field since regulations tend to grow rather than contract. And since the science and equipment involved is completely different from their existing work, it would be functionally impossible for them to merge us into any existing facility or department.
I am curious, however, exactly how much “meddling” to expect, and whether there will be significant changes in the company hierarchy, etc.
Believe this with a big pinch of salt. They are clearly not going to destroy something that works, but that doesn’t mean that the acquiring company won’t look for efficiencies in the new one. What was the reason for the sale? Was the company losing money? Did your company’s owners get an offer they couldn’t refuse, or did they put the company on the market? If they did, it could be that your old MD wanted to retire or cash in, but it could mean there were financial problems of which you were unaware. In either case, expect some ‘efficiency savings’ to be coming down the line and in the latter case, expect some heads to roll.
Like others have said, nothing will probably happen for six months to a year. But then there will likely be some upheavals. Skills matrices being drawn up and you being interviewed for your position (see Office Space).
If you’re technical and not overlapped your job will probably be safe, but your manager/s may not be - and they way you currently do things may erode.
In my two experiences I witnessed different phases of the process. Don’t know how typical these are, so take what you want from them:
Private company acquired by stock market listed company in the UK. My job was duplicated. I flew to London to meet my counterpart. I asked him what his philosophy and approach to the role was and he replied like a Moonie “I don’t have one, I just do what the CEO tells me”. He was a yes-man and located in Head Office, so I knew I was doomed and started looking for a job the moment I got back.
Autonomous division of a vast company, that had been a private company acquired about a year before I joined. After I’d been there a year the integration stepped up a gear and they stripped out one layer of the original middle management, and simultaneously made us adhere to the larger company’s accounting procedures (SAP), salary structure and approved supplier list. Initially this wasn’t that bad apart from the approved supplier list, as we had originally been a marketing agency and we constantly hunted round dozens of suppliers to get the best deals to bolster our margins. Suddenly we weren’t able to do so. It took more than a month to get a supplier on the list and we had to get three quotes and write a fucking essay to justify it each time - and some anonymous drone could turn us down and we’d never know why, so we couldn’t commission work on spec. We ended up paying more for lower quality outputs.
Then I got a significant promotion but the larger company’s salary structure kicked in: they “couldn’t” offer me a higher salary. The people I was managing were on rather more than I was. I bitched about this to my senior management and they said their hands were tied, so I got another job.
I went through this once; it wasn’t too bad, but a lot of things did change. If you adore your company and your job and don’t want to see a single thing change, I think you’re going to be upset.
I’ve been through this twice as a participant: the company I worked for was acquired by a much larger company, and then that company was acquired by an even larger company.
There was definitely a period of transition in both cases, as we got used to doing things the way the acquiring company did them. I got new managers and a newer (and much longer) commute, but I also got the ability to telecommute to a greater or lesser extent (greater now–I hardly ever have to go into the office unless there’s a big meeting or something).
In both of my cases the acquisition was unwanted (in the first case our company’s IPO was scheduled to happen shortly after 9/11, and when the bottom fell out of the industry after that, we never recovered; in the second case it was a bitter takeover attempt that didn’t end well for the underdog). However, I must say that for me, and I think for a lot of folks, it didn’t end up being nearly as bad as expected. I was all ready after the second acquisition to start putting out resumes and looking for another job because I didn’t like the company who’d acquired us, but I hung out for awhile to see how things would go and it ended up being great–I love the company now and I love my job.
As far as the OP’s situation goes, I agree that as long as your job isn’t redundant or in one of the areas that tend to get cut loose during acquisitions (HR, marketing, middle management, etc. of the acquired company) you’re probably fine and might even end up in a better position (salary- and benefits-wise) than you were in at the old company. Acquiring companies don’t tend to cut loose the folks who actually make the product/do the company’s vital work, especially when they don’t have an analog in the new company. Even if they do, they tend to look at both the old employees and the new ones and keep the ones who are the best fit, regardless of where they’re from.
The best thing you can do is to take a step back and look at things from the acquiring company’s point of view. They are buying your company for a reason; you need to figure out what that reason is. Look at every analyst call and press release you can find. Read between the lines.
Once you understand to objective of the company, it should be possible to figure out what they will do. Plan your response accordingly.
I’ve seen companies buy competitors with the clear intention of shutting them down. I’ve also seen acquisitions where the acquired company essentially takes over the acquiring one. There are probably more poorly executed mergers than well executed ones. Also, objectives will change as the business situation evolves and managers leave and are replaced.
Thanks for all the input. I’ve thought about some of your comments/questions and I do think there will be some upheaval down the line. In our previous incarnation, we were up against the “small business” employee cap (50) so a lot of people had multiple job functions. This was probably inefficient but necessary because there just wasn’t enough manpower to have segregated jobs. As a result, both of my direct managers have not only managerial functions but are also study directors in their own right. It would not surprise me if, at some point in the future, people were brought in to handle only the managerial/financial aspects of the work, leaving everyone else to focus on the scientific side of things. This seems like it would be a superior arrangement to how we’re currently doing it.
The reasons (given) were twofold. One is that our company had a limited amount of growth we could do in our current situation. Further growth would require a significant investment by either of the two owners of the company, probably by way of taking out loans which they were reluctant to do based on their age. Which segues into the second reason, which is that the managing director (who is also the founder) is 62 and would like to step back from work in the next year or two.
According to everything I’ve heard, our company was financially sound which is backed up by the record bonus I received last year. Maybe they just really, really like me, though.
Don’t be surprised if you have to go through a job review process anyway. Don’t know about your jurisdiction but in the UK at least they have to have a consultation period with everyone in the company or division before chopping heads. So if you suddenly find your position being reviewed it doesn’t specifically mean your job is on the line - it could just be a legal CYA - and because you’re a specialist you’re probably going to be a shoo-in for your existing role.
It would help for you to find out as much as you can about the acquiring company - particularly from the perspective of current employees. Try to get some personal anecdotes over a beer or something.
I’ve been through this process – TWICE – by the same company!
First merger was in the late 90s. the “parent company” decided to buy our company and tried to “absorb” it. They tried to rationalize our products into theirs. Bottom line: it completely failed. Within 5 years, virtually all of the employees of the first company had moved on and the parent company shut down the division.
Second merger was about 5 years ago. The second company was composed of many of the employees who left the first company after the botched merger. When parent company approached the second company, our management kept asking the parent company, “You really blew the first merger and destroyed all of the value of the first company. What would you do differently this time?”
Well, this time, they have left us mostly autonomous and haven’t tried to absorb us. We’ve been able to plot our own course (mostly) and have deeper pockets backing us up and giving us additional credibility in our market. This time, it is actually working well.
So here’s an example for you of 2 mergers by the SAME parent company that had polar opposite results.
I went through this once, and this paragraph just popped up a big red flag for me.
In my case it was a big European company that wanted to expand its U.S. presence. They bought several independent companies with specific niches in the industry. Except for combining some financial and service functions, they pretty much left the individual units to do their own thing, as long as there was no direct competition.
All of the old companies were privately owned, and the new company promised the old owners big bonus payments. Slowly but surely they tightened the screws on the old owners (now directors) to increase their units’ revenues and profitability. Eventually the old owners got fed up with being treated like peons and left even before their contracts expired. My own boss packed it in after he realized that he had been on the road for 240 out of the previous 365 days.
Then the big company merged all the independent divisions and installed their New World Order.
Your new owners may be prepared to invest a lot of money into growing the company, but they’re going to expect a lot in return. Quickly.
In my company, they set very aggressive financial goals and won’t acquire another company unless they think it will improve the overall company’s financials within a few years. Since there is usually competition for the acqusition, we allmost always get outbid by someone else, unless we dream up enough “synergies” to justify either a big boost in the acquired company’s revenues, or a big drop in the costs (i.e. firing people either in the parent or the child company). After the acquisition, the aggressive targets that were created in order to justify the purchase are never met, so after a year or so, they look for more heads to roll.
Who knows what will happen in your case. Think of it as an adventure, like John Wesley Powell boating down the unexplored Grand Canyon. It will be turbulent, you might all die, but it will be an exciting ride.
I’ve been thru this, more than once. It depends on the corporation who buys you, but in my case they were a distressing mix of incompetent and dishonest.
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Things I Should Have Done**
[ul][li]Get it in writing, or they didn’t say it. I was promoted and promised a raise. I got a shitload more work, but never received the raise. The lawyer I consulted said there was probably nothing I could do, because I only had e-mails and not a contract. [/li][li]Expect a good deal of confusion over changes in benefits. Your health plan in particular may be significantly different. [/li][li]Management style has to change. A small company cannot and will not be managed the same way as one ten times larger.[/li][li]The larger the corporation, the more worthless HR is. Sorry, but that is my experience. When we were a company of 25, HR was there to help. When we were acquired by a company of 5,000, all they did was send out memos about being “nimble” and motivational bullshit, and then screw us over on vacation time.[/ul][/li]I hope in all sincerity that your experience will be better than mine.
My employer was acquired about ten years ago by a company about twice it’s size, though it was touted as a merger of equals.
The CEO of the acquiring company held a “town hall” meeting with all the corporate employees of the acquired company, where he promised that we would have the same employment opportunities as the parent company’s employees. When we left the meeting, someone had plastered the HQ with copies of a memo the CEO had sent to all corporate employees of the parent company, committing that no matter what they would hear, no one at the parent company would lose their jobs as a result of the merger, not a single person. All the cuts would come from the inefficient, failures at the target company. Two years later 16 out of about 600 corporate employees of the child company were still around and all of them had relocated to the new company HQ 300 miles away. I was one of the 16.
At least after the incident, there was no more bullshitting about merger of equals.
[li]Expect a good deal of confusion over changes in benefits. Your health plan in particular may be significantly different. [/li][/quote]
Fortunately, our health plan is going to be significantly better. My current monthly contribution is about $1050; it’s going to be only $260 with the new plan. That right there is basically like making another $10k in salary per year.
[quote]
[li]The larger the corporation, the more worthless HR is. Sorry, but that is my experience. When we were a company of 25, HR was there to help. When we were acquired by a company of 5,000, all they did was send out memos about being “nimble” and motivational bullshit, and then screw us over on vacation time.[/li][/QUOTE]
While it’s hard to tell anything from a short meeting and some brief chats with their HR people, from what I’ve seen so far is that they’re pretty helpful. The purchasing company is “only” 500 people (worldwide) which I think is small enough that the HR department is not destined to be unhelpful slobs.
I’ve been through it three times. The first time was a buyout/merger with a competitor, and the last two were the company being bought by a comglomerate with a similar company already in its stable of companies.
Each time, there were promises of no changes. They were going to grow us, blah, blah, blah, and each time it was bull. The first to go was most of middle management, then higher management was streamlined, meaning half of them were gone, too.
I actually benefited by moving up the ranks after those above me were cast aside. The worst part for me was enduring people I otherwise liked becoming the world’s biggest asskissers to our new leaders.
But being an asskisser to the new leaders is really what should happen. Not in a fake way but in a proper attitude way.
The worst thing you can do is think that there is one right way to do things and fight the new managers on how things “should” be done (even if from one perspective it is “the” right way, because there are always multiple perspectives).
The best thing you can do is to realize that they are the boss, your job is to help them realize their vision. Take the attitude that you need to learn what they think is important and embrace it. There is always time to influence down the road but trust needs to be there first, and trust is built by them thinking you are fully committed to the new world order.
