Trade secrets: surviving a merger – navigating the M&A minefield

It looks as though more mergers and acquisitions (M&As) will have taken place in 2007 than ever before. But two things never change about M&A deals: first, that a large number will fail to deliver what the architects of the deal promised and second, that many people will lose their jobs when companies combine – after all, who needs two heads of HR or the support team for two payroll systems?

It’s also an unfortunate fact that many of the survivors are not the best qualified or most experienced of the two internal candidates from the pre-merged companies – politics and luck have a role in who survives and an outsider may be brought in, or you may be demoted to a more junior role.

The secret of survival is not to leave it to chance. Our research at Cass Business School has uncovered some ‘tricks of the trade’ to being a survivor if your company is acquired. Even if both you and your counterpart remain, how do you make sure you’re the one on top?

There are no guarantees, of course, but there are several things you can do to improve your chances of keeping your office – or even getting a bigger one.

Get involved early

You must start early, and it’s best if you hear about it before the deal is announced (not always automatically the case when you’re in HR). Get on to the merger planning committee and ultimately the integration committee. This will give you the inside information before anyone else. You’ll know how the company will be organised, and since it is common to announce the top several layers of post-deal management right after the deal has been made public, anything done after that is actually too late.


Once you’re on those committees, you’ll begin to network with the other decision-makers, including those from the ‘other’ company who will soon be your colleagues. This makes you more valuable to the new organisation – and less likely to be made redundant – as there won’t be many who have networked well in both companies.

One caveat: don’t be so critically important to the post-merger integration team that you cannot be taken off that team to accept one of the new key management positions.

Be visible

You should also stay around the office – particularly the headquarters – as much as possible. Become as visible as you can and avoid the common tendency to keep your head down during this period. This didn’t save people from dying in the trenches in the First World War, and it doesn’t work on the battlefield of business either.

Focus on building your network, both internally and externally. You want as much intelligence about the company as possible. Remember that sometimes those external to the company – such as headhunters, consultants and suppliers – may be better placed to know what’s actually going on because they can see the wood, not just the trees.

Let everyone know what you are doing. This is not the time to be falsely modest. Encourage your external relationships to say that they work with your company because of you. If there are others in the company who can say this as well (and you’ll say it about them, too, of course), tell them to do so.

Be flexible

You will need to be willing to move or change jobs because the headquarters may change or the new organisation will need skills of a different nature (of course, when the merger integration committee writes one of the new senior management job descriptions, you’re the one person who can fit the bill perfectly).

You may want to take key members of your team with you, so keep them happy during the merger process. This has other benefits too: with all the consultants running around the company during a merger, it’s likely that your team will be asked about you.

Your team will also be a good source of information – the rumour mill is always strongest at the lowest rungs of the organisational ladder, and there’s usually some truth to every rumour.

Explore your options

But whereas you should rely on your team, don’t rely on your boss. He or she is probably looking out for number one and not you, despite what you might be told. And where’s the guarantee that your boss will be one of the survivors?

However, despite the best planning, you may still get the short end of the stick, so be sure to polish up your CV. Call the headhunters who know you. Check the appointments section of this newspaper. Know what you would want if you are made redundant, as there is often some negotiation possible on termination packages.

And hope for a little bit of luck.

The power of employment contracts and retention payments

In the late 1990s, Deutsche Bank acquired Bankers Trust, the eighth largest bank in the US. At the time of the acquisition, Deutsche Bank set aside almost $420m over three years to retain 200 key staff, many of whom had already negotiated their retention payments with Bankers Trust when it was rumoured that it would be acquired.

What’s even more interesting is that some of those staff were ‘double dipping’. In the year prior to the Deutsche Bank acquisition, Bankers Trust had acquired Alex Brown, the oldest investment bank in the US. At that time, Bankers Trust had reserved nearly $300m over three years for incentive compensation for a group of several hundred Alex Brown employees – some of whom were likely to be the same individuals getting special payments from Deutsche Bank.

Not a bad deal if you can get it, while at the same time keeping your job.

Don’t let a merger damage morale

New research by Kenexa among 10,000 US workers reaffirms the negative impact of mergers and acquisitions on employee morale.

The findings suggest that when a company is merged or acquired, employees lose confidence in its future which prompts them to consider leaving.

Comparing the data from the 1980s and 2000s, Kenexa found that job satisfaction has improved, but people are now more likely to feel insecure and consider leaving during a merger. Feelings of insecurity are exacerbated when redundancies occur, creating a profound impact on an employee’s sense of job security.

“Merger and acquisition activity creates vulnerability to talent loss,” says Jack Wiley, executive director of Kenexa Research Institute.

“To begin the healing process and ensure employees remain engaged, management must clearly state a tangible vision and plan of action. This should include accurate and timely information about the merger and its impact on the workforce,” he adds.

Tips on being a survivor

  • Think about your personal strategy early. Pay attention to any rumours you may hear – they often contain some truth.
  • Get appointed to one of the post-merger planning committees. Encourage colleagues you trust to do the same.
  • Be visible. If you don’t work in the headquarters, find excuses to visit there.
  • Make sure that people know how valuable you are. If your clients can mention your value, even better. Now’s the time to bring in new business that has been percolating for a while.
  • Rely on your team, but not your boss.
  • Network, network, network – internally and externally.
  • Don’t forget to stay in touch with all the headhunters who have been calling you for the past several years. You may need them now, despite the best personal planning.

Our Expert

Professor Scott Moeller teaches mergers and acquisitions to MBA students at Cass Business School in London. He was an investment banker for 18 years before leaving banking for academia in 2001. His book Intelligent M&A: Navigating the Mergers and Acquisitions Minefield, published in June by John Wiley, discusses this topic in more detail, as does his blog.

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