What Happens During a Business Acquisition?

Business acquisitions mean change is coming … for everyone involved. As more employers acquire new companies, more employees will face potential layoffs, restructured workplace dynamics and new coworkers. It’s not an easy transition to handle. So as an employee, with very little say in the process, how can you survive it and #GetAhead??

By Mariah Flores

You’ve just received news that your current employer is undergoing a business acquisition.?

Great.

Your employer is joining ranks with several other companies around the world going through mergers and acquisitions. The growing list of companies participating in acquisitions includes Amazon, Oracle and 7-Eleven.?

But what exactly does an acquisition in business mean and how will it affect your employment status??

Many times, when a company is acquired by another, certain employees are left to fend for themselves. They must navigate a rather ambiguous moment, where jobs aren’t always promised and sometimes straightforward answers aren’t immediately available.

Sadly, in the case of 7-Eleven (and other companies), recent layoffs and firings occurred as a result of “restructuring,” due to their recent acquisitions. Additionally, “overly eager expansions” by other companies during the COVID-19 pandemic have caused many organizations to reevaluate their workforce numbers, enforcing hiring freezes and layoffs.

Business acquisitions can also be a time when employees must decide whether or not they even want to stay with their “new” employer.??

While you may never experience an acquisition in business during your professional career, it’s still a valuable topic to learn about. You never know when things in the workplace will change — for the better or worse.

What is a Business Acquisition?

Many people conflate business acquisitions with mergers, so what’s the difference?

“Mergers combine two separate businesses into a single new legal entity. True mergers are uncommon because it’s rare for two equal companies to mutually benefit from combining resources and staff, including their CEOs,” according to the U.S. Small Business Administration (SBA).

An acquisition doesn’t result in the creation of a brand new company. Instead, one company acquires a purchased company, fully absorbing it — and sometimes the purchased company is liquidated.

Acquisitions, and mergers, usually occur when a company is looking to expand and grow its business.

When instructing on the subject in his popular LinkedIn learning course “Mergers & Acquisitions”, Mike Figliuolo, the managing director of thoughtLEADERS LLC, says “It can add to your capabilities. It can even change the competitive dynamics in your industry. While growth can come quickly, this approach to growth is also fraught with many risks.”

The Good, Bad and Ugly of Acquisitions

There are so many factors that play into what an acquisition will entail, making it difficult for employees (from both the purchasing company and the one being acquired) to know what exactly to expect.

Some factors, according to Figliuolo, include:?

• Strategic fit: there needs to be strong rationale, such as a new market or capabilities (people and/or products).
• Financial strength: ability to afford the purchase and pay interest on loans needed, along with being able to make necessary investments during the integration process.
• Company culture: clashing cultures are hard to combine, making this factor a big determinant of a successful acquisition integration process.

“If the acquisition target is cost-focused and you're innovative and revenue-focused, it's going to be hard to combine those cultures. Cultural fit is a big determinant of acquisition integration success.”

Good acquisitions take all these factors into account, with companies taking the proper steps to access purchasing deals, ironing out fair negotiations and planning a successful integration.

Of course, there’s no guarantee that a business acquisition will result in zero layoffs or restructuring of existing departments. It’s just not a realistic outcome for every company.

Responsible companies looking to acquire another company also define other terms related to their acquisition deals.?

According to Figliuolo, the deal terms include things like:?

• Retention bonuses
• Limits on competitive activities
• Severance packages for those laid off
• Stock or other incentives for employees who stay with the acquired company

Such terms are typically negotiated prior to a sale and aim to protect the buyer’s future interests.

“For severance packages, you'll need to answer who gets paid how much. That seller is probably going to want to protect their people who are going to remain with the combined entity,” says Figliuolo. “You want to keep key personnel. Make signing a retention agreement a condition of the deal. You can even use holdbacks to enforce those conditions.”?

But be careful, he warns, as these types of deals could backfire on you. Some employees may stay on, waiting for that promised pay off once their required amount of time is fulfilled, but not doing their best work for the acquired entity.

No matter what, proper due diligence in acquisitions is key and a great sign for employees (and stakeholders).

Surviving a Business Acquisition

Here comes the hard part, once a deal has been struck: survival.

Business acquisitions are a corporate decision, meaning managers and employees have little to no say in the entire matter. As a result, employees face an understandable rollercoaster of emotions, from anxiety to stress.

On average, roughly 30% of employees are deemed redundant after a merger or acquisition in the same industry, as reported by the Harvard Business Review.

Mergers and acquisitions can create “a period of tension, uncertainty, and even chaos,” as workloads, pressure and additional stress increase. Employees must quickly adapt to unfamiliar policies and office politics, unknown coworkers from different corporate cultures, or work under new bosses who don’t know their working record.

All of this forced change and your job still isn’t guaranteed with the resulting organization.

And it’s difficult to focus on what you can actually control, especially when there are so many unknowns. Here are some ways to try and “survive” a business acquisition:

• Learn and understand why your employer was acquired — this can help you gauge what kind of employee or work the purchasing company is looking to keep on or expects.
• Always have an exit plan. You need to always have some type of contingency plan, so start polishing up your resume, reaching out to your network and determining where you see yourself working next.
• Showcase your unique skill set. If you want to keep working at the combined entity and see some areas that could benefit from your unique expertise and skills, show off and do your best work.
• Address your weaknesses. Even if you are let go, head into your next role and company with strengthened skills.
• Be open to collaboration and innovation. Your company has changed, so remain open to working with new coworkers or delving into new projects/assignments.
• Express your desire to be a part of the integration process. If you suspect that layoffs are coming or simply really want to grow with the new combined organization, communicate that clearly with your boss.
• Ask questions. Don’t be afraid to ask a higher-up or human resources manager what the future holds for you after an acquisition.
• Follow your instincts. You know yourself better than anyone else, so if you want to stay or quit, trust yourself.

Business acquisitions are a tough pill to swallow and cause lots of uncertainty for employees. By always embracing your strengths, acknowledging weaknesses and having an open mind (and exit plan), you can survive anything the working world throws at you.?

Top Takeaways?

Here are three ways to survive a business acquisition:?

• Create a contingency plan and be ready to exit a company when the unexpected occurs.
• Learn how to advocate for yourself, whether it be by expressing your desire to work for the combined entity or resign.
• Ask questions: not everything is unknown during an acquisition.?