While financial data remains the primary focus in deal valuations, buyers increasingly place a premium on acquisitions with management teams that share their values and expectations, according to Conor Cullen, partner transaction services financial advisory at Deloitte Ireland. “Ultimately this alignment leads to a smoother integration process which delivers value in itself.”
But how do you ensure key players stay, particularly for the first 100 days, and then beyond the integration period?
Mergers inherently create uncertainty for employees on both sides. If key leaders or managers are replaced or leave after an acquisition, it can cause uncertainty and a lack of direction among staff. They need stability and certainty at this time, while they are in the adjustment period getting to grips with different values, new systems or workflows. Cultural conflict has the potential to derail a successful deal. Strong leadership, clear communication, and a well-articulated shared vision are essential to maintaining alignment and unity among the workforce.
When human capital is mission-critical in the wake of a merger, figuring out what it will take to secure key employees can be as simple as asking the question: Do you see a future for yourself here?
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“To ensure key talent remains post-deal, buyers should be open and transparent about the company’s future vision and individual roles. Offering retention bonuses or contracts can help, but it’s crucial to foster an inclusive culture where employees feel valued and integral to the company’s success,” says Ray Egan, director, corporate finance, PwC Ireland. “Engaging in one-on-one conversations with key employees to understand their career aspirations and addressing concerns early on can also strengthen commitment and loyalty.”
Communication should be quick, accurate, constant and clear, so that no employees, on either the buyer’s side or the acquired company, feel left in the dark about their prospects.
Building a sense of trust is foundational to employee retention after a merger, particularly in a remote and hybrid world, where people may not spend so much time face-to-face with colleagues. They have less opportunity to create a connection and may have less understanding of what they are dealing with.
According to survey data from Korn Ferry, the top two factors that directly affect employees’ trust in their employers are communication and transparency. Transparency in decision-making, clear communication of business goals, and ensuring that leadership is accessible to address employee concerns can all help to foster that sense of trust after a merger.
“Balancing retention efforts for acquired talent with the expectations of existing employees requires sensitivity,” says Egan. “Transparent communication about retention strategies is vital to avoid alienation. Consideration should be given to aligning the benefits and opportunities offered to both groups, ensuring fairness. Additionally, fostering a culture that appreciates diverse talents and contributions can mitigate resentment, promoting a cohesive workforce that embraces new colleagues rather than viewing them as rivals.”
Retention incentives come in various forms – financial rewards like bonuses and stock options are common, but non-monetary incentives also play a part in fostering long-term commitment.
“A holistic retention strategy emphasises career development, recognition, and work-life balance over just financial incentives. Offering professional growth opportunities, such as training and mentoring programs, can significantly enhance job satisfaction and loyalty,” says Egan. “Creating a positive work environment that supports employee wellbeing and recognises achievements fosters a sense of belonging and purpose. This approach not only retains talent but also builds a motivated and engaged workforce committed to the company’s long-term goals.”
Ultimately, financial incentives matter. Implementing an employee share plan early in the process gives key staff a tangible reason to stay, redirecting their focus from job security concerns to business goals and company performance, according to Egan.
“Introducing an employee share plan early in the integration process is crucial for aligning employee interests with company goals, boosting morale, and fostering a sense of ownership among employees. It allows employees to believe that their positive contribution to the business can impact them financially over the long term through the uplift in the value of the shares. Additionally, it demonstrates the buyer’s commitment to long-term employee engagement and investment in their future, which can be reassuring during times of change.”
