How to Retain Your Employees During and After an M&A

Mergers and acquisitions. These are two words that can conjure images of a value-creating deal for many business owners and executives, but at the same time, it’s a concept that can cause employees to become anxious, and even lose their sense of motivation and engagement. The result of a poorly managed M&A scenario can often be the loss of key employees, and that can be disastrous for a business if it’s essential to maintain these employees.

Making a deal in the business world is challenging enough, with Firmex reporting the number of complete mid-market deals has fallen in 2016 in their report, “Mid-Market M&A: The Valuation Gap.” That means it’s critical business owners do everything they can to keep a deal moving along smoothly toward completion, and a big part of that is making sure employees are happy with their own situation.

So what can you do to effectively manage employees during an M&A and make sure they stick around well into the future?

Identify Your Key Employees Early On

You may not be able to keep everyone during an M&A, and you may not even have an interest in doing so, but you don’t want to lose your best talent. It’s important to identify these key players from very early on in the process, so you can put your effort toward keeping them on. If you can hone your focus on your most valuable employees, it’ll be easier to bring them along during the transition.

Reach Out

There are plenty of retention efforts you can try during an M&A, but the one that most frequently goes underutilized, yet costs nothing is the personal touch. According to a survey from Tower Watson, 74 percent of the most successful M&A companies used managerial and leadership outreach to retain their top employees.

On the other hand, the same study showed only 24 percent of those businesses that weren’t as successful used what calls “the human touch.”

Financial Bonuses and Incentives

Of course, while the personal touch element is an important part of retaining talent during a transition such as an M&A, sometimes money is essential as well. Adding monetary retention incentives can be a valuable way to keep your employees on board, and many companies will integrate the cost of these bonuses or cash incentives as part of the overall cost of the deal.

What’s important to realize, however, is that this is only one part of a successful retention plan. Yes, money may be appealing in the short term, but it should be incorporated with other tactics listed here for the most effectiveness.

Transparency and Support

To conclude, there are a couple of key concepts that can never be left out of your M&A retention strategy: transparency and support. Provide honesty and transparency to your employees throughout the process. Let them know what to expect in as much detail as you can reasonably provide. Let them know not just what’s happening to the company as a whole, but also what you expect of them. Provide them support, training and resources so they can effectively make any necessary transitions. These employees will reward you with loyalty if you’re able to include transparency and support as essential aspects of your retention strategy.

, , ,