Nothing Will Change After the Acquisition

An acquisition, merger, split-off, split-up – all are major business events. It has always amazed me how top management will sometimes try to reassure employees when they are confronting this kind of upheaval.

Let’s Think About This

Let’s just consider making an acquisition. I like this one because I’ve been there numerous times and seen this play out several ways. Regardless of what the final results were, one thing was amazingly consistent. In each case upper management, in one way or another, tried to reassure employees using statement like, “Nothing will change once the acquisition goes through” or “Don’t worry about a thing, your job is secure.” Now wait just a minute, if nothing is going to change after the acquisition, just why is it being done?

Some Reasons for an Acquisition

Among the reasons given for making an acquisition are such things as:

  • We need a way to enter this market
  • They have products or services that complement our offerings
  • We either grow or eventually go away, and this is one way to grow
  • It’s either acquire or be acquired

Obviously, this is not an exhaustive list but more of a sampling.

But There are Hidden Reasons

Despite all these seemingly good reason, generally underlying any acquisition or merger is some level of assumption that cost efficiencies can be realized. Think about it:

  • Will the merged company really need two CEOs?
  • Can two CFOs be justified?
  • Are there redundancies in administration, sales, marketing, production, etc?

Here is a classic example. Over the last few years, since deregulation, we have seen a number of airlines make an acquisition or merge. In these cases, it has generally been stated up-front that they will be merging reservation systems, or maintenance, and/or other areas. Here it is clear from the start that things are changing and it probably means some positions (low level, mid level and high level) are going to go away.

Other companies are fundamentally no different in this regard. It is highly unlikely there will be no changes. Another thing that often happens is that, even if top management for both companies stays on board, eventually one group emerges as the one in charge. Interestingly, it is not always the management of the acquiring company. In fact, I remember a company where I worked a number of years ago. We made two acquisitions that I recall. In the first one our management remained in control. However, in the second case, though the company purchased was considerable smaller, their management team eventually took over and moved top level people from our original company out of positions they had held for years.

Tell Me Why

So, get over the idea that nothing will change after the acquisition, merger, split-off, split-up or whatever. Thinks will change as a result, whether you want them to or not. Otherwise, why really go through with it. Yes, you may want a particular market, product, service, etc, but in the end you really want more – you want a company that will be more than the sum of the two original companies.

How about you? If you have been in this kind of situation, what did you experience?

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As always, your comments are welcomed.

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