A View from the Trenches
by Jack Prouty, President M&A Leadership Council
In an acquisition of a target company, we typically spend a lot of time and attention on the management and staff we are acquiring. There is an attractive “consulting agreement” provided to the CEO who will be leaving in a few months, retention bonuses for key staff, stock options that upon change of ownership become fully vested, severance packages (often quite significant) for displaced staff, and other financial incentives to keep people happy. But, what about the staff from the acquired company?
- The Chief Executive of the acquiring company, making $400,000 a year, sees his counterpart of the acquired company walk away with $12 million dollars (a recent client example)
- The integration team sees a 12-hour workday with high stress as they try to balance their normal job with the additional requirements of driving the integration effort
- The operations folks deal with the added workload of managing two businesses in transition without additional monies for the increased workloads
- Payroll, accounting and other staff see large checks issued to folks on the acquired side… and are saying, “What about me, when do I get my rewards and recognition?”
This is not sour grapes, this is a legitimate reaction and complaint. I hear it time and again as I work with organizations while their staff takes on the ‘heaving lifting’ of planning and implementing a successful acquisition, absorbing the increased workload of a larger and more complex business, and dealing with aggressive timeframes and more stressful workdays.
What to do with this real concern? First there needs to be recognition of the extra effort that the functional staff is taking on during the diligence, integration, and resulting end-state operations.
Recognition and thanks can be in several forms, all of which we recommend:
1. Bonuses and financial rewards to compensate for the extra work required
2. Stock options are always appreciated
3. Presentation of valuable gifts and certificates such as watches, dinners out, air travel or cruises
4. Extra paid vacation days
5. As appropriate, job promotions and salary adjustments
However, beyond the financial rewards to the individuals, don’t forget the value of public recognition, including personal thanks and appreciation from the CEO and senior management. It is always surprising how much this can mean to the staff of an organization. It may be complemented by a group dinner, the award of a certificate or inscribed gift, profiles in the company newsletter, etc. A sincere thank-you from senior management to those who worked hard in the trenches to make this M&A successful goes a long way.
Last, but not least, think about providing “thank-yous” to the spouses of those who dedicated so much time and effort to the M&A. I have seen companies send dinner certificates to the spouses with a sincere thank you letter from the CEO; a weekend hotel stay; flowers and other gifts. Even if the cost is not great, just the thoughtfulness and gratitude to them for the support they provided to their spouse is very well received.
Bottom line: we need to recognize, reward, and obviously thank those that will be doing the above-and-beyond effort to make this acquisition successful.
Regards,
Jack