After the Merger: Who Stays, Who Goes?Hint: It's Better to Acquire than be Acquired
Although a merger is usually thought of as a union of two enterprises, the legal definition comes closer to reality: "The absorption of a lesser estate, liability, right, action, or offense into a greater one." And if you are one of the acquirees, unfortunately you have got 75-25 odds of getting laid off.
On the other hand, an acquisition is the purchase of an asset or the total assets of an entire company. This year could very well set a record for deals within the banking sector, to cite a few prominent deals: Former Wall Street powerhouse Bear Stearns was acquired by JP Morgan Chase; Bank of America acquired Countrywide Financial earlier this year and most recently Merrill Lynch; and then Wachovia is to be acquired by Wells Fargo for $15.1 Billion.
Mergers and acquisitions often present tight time frames in which employees must make life-altering decisions for themselves and their families. That is because only a few key people will know of the acquisition before it's announced. For publicly traded companies, Securities and Exchange Commission (SEC) insider trading rules require secrecy until the deal is announced.
Without a doubt, uncertainty is the number one issue after announcing a merger or acquisition. And the key question that most employees dread is: Who stays and who moves? And what factors play a significant role in deciding their very immediate future?
"It largely depends on the ability of the existing organization doing the takeover," says Jennifer Bayuk, the former CISO at Bear Stearns & Co., who became an independent consultant after the company was acquired by JPMorgan Chase earlier this year. "Usually the core functions at the takeover organizations are very robust like payroll, accounting, marketing, technology, finance and audit departments, and hold core competency and capability of absorbing more work. Therefore, there is a huge overlap and duplication of jobs within the core functional, executive and managerial level that are the first to get eliminated, irrespective of their seniority, performance or experience."
Every acquisition is different, but in general the acquiring company (or dominant partner in the merger) makes future staffing decisions based upon future strategies and the skills needed to realize those strategies. 'Corporate' groups tend to always be at risk in such scenarios, agrees David Reimer, Vice President, North American Delivery, DBM, a career management firm providing services to private and public companies. "The good news for those employed in these departments is that their skills are highly transferable -- nearly every organization has IT, finance or human resource needs. Re-employment for these professionals can occur relatively quickly."
Most employees who are let go generally go through a career transition process that facilitates the design of a strategic termination system, including procedures, scripts and forms. This is to ensure that terminations are conducted professionally and within legal guidelines. Expert career management professionals hired by the organization guide employees to gracefully exit their current job role and workplace through a successful transition into their next career opportunity -- usually by providing programs designed to help participants acquire skills, support and knowledge needed to be successful in job search efforts through individual/group training and counseling.
"Transition time varies significantly," Reimer says. As a best practice, most organizations give terminating employees preferential access to internal openings across the business entity over a finite period of time, whether those opportunities are in the legacy organization or the new organization. The standard is 30 to 90 days. Beyond that, offering outplacement services is standard practice, although industry norms vary from three months to 12 months. "The best practice for outplacement support is 12 months of support for all exited employees, regardless of level," Reimer says. "More typical, however, companies offer three, six, and 12 months of support, depending upon employee level."
However, there are situations when employees from the acquired organizations will stay, says Bayuk, especially in cases where the acquired organization is dealing with specific services, products or product delivery expertise in special markets. "For example, a department dealing with specific foreign exchange for a defined market or region -- in such situations the entire department dealing with special expertise moves in within the new organization," she says.
Again, there are types of employees who are required after the merger or acquisition takes place for a specified period of time who are basically involved in transition or merging a product or service within the new organization. This extended time usually helps them prove their worth and perhaps get a fulltime position within the new organization.