How to retain employees post acquisition?

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July 11, 2018

by a searcher in Salt Lake City, UT, USA

What did you do to ensure the employees would remain with the company? Did it work? What would you do differently?

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Reply by an intermediary
from DePaul University in Austin, TX, USA
I've been on the sell side of many deals in the low/middle market. This subject always comes up because it can be an enormous business risk. You need to be flexible and you need to talk to the current owner(s) about it. What would motivate the current employees to stay on board? Sometimes you don't have to offer anything but mitigating the uncertainty of the current employees is of upmost importance. I almost never suggest a cash bonus immediately after close. If an employee is going to leave you can't stop them no matter what and you probably didn't want them anyway. What I often suggest is offering benefits (or better benefits) and a 12 month retention bonus / performance bonus. 12 months will give you a good read on the value of each employee. I would almost never suggest giving any sort of equity away.
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Reply by a searcher
in Salt Lake City, UT, USA
Timothy, thanks for your perspective. Having made an acquisition myself, I can say that depending on the company and the level of seniority a leaving employee has determines a lot about how serious the situation would be. I think it's human nature to put on a brave face and many employees might say they are excited and be very worried behind the scenes. You can imagine what it might be like to work for the same boss for###-###-#### years and then suddenly answer to someone different. Change is good, but it can be hard for many people. If a key employee was on the fence about whether to stay or go, having a new owner might be all the push they need to go. Or stay!
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