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How to make ‘acquired’ leaders true believers

By Dean Kepraios | September 13, 2022

What do acquired leaders want? It turns out they want a lot of the same benefits other employees want.
Employee Engagement |Mergers and Acquisitions|Talent|Total Rewards
Mergers and Acquisitions

Unless you’re a grandparent showering gifts on the grandkids, you can’t buy loyalty (besides, deep down grandparents know gifts don’t guarantee devotion). The same goes when retaining valued leaders during a merger or acquisition.

Winning “hearts and minds” of key personnel – an absolute necessity in maintaining or growing deal value – goes far beyond the traditional approach to compensation-only retention plan design, typically a one- to three-year cash payment plan that focuses on equity, deferred proceeds, holder agreements and retention funds.

Money is no longer enough

While financial incentives play a leading role in a talent retention strategy, a holistic approach is more effective especially during any period of uncertainty or change, the hallmarks of a merger or acquisition. But it’s more important now amid the uncertainty and fluidity in the job market.

Retention as an insurance plan

While some deals are pure asset purchases, most deals we work on feature acquisition of the intangible: intellectual capital, skills and experience—not to mention potential—of an organization’s leadership. People are a critical asset in these transactions and retaining key employees enables deal success. Monetary or contractual retention should be one of many levers.

One of our clients, a technology company, has found that non-monetary retention has long-lasting payoffs. Basically, it approaches retention as an insurance plan.

Integration retention

It is common that the leaders of the target will most likely not be leaders after the acquisition. To engage them, you should instill excitement about joining the acquiring company.

During a recent M&A roundtable, an HR executive at the tech company shared the integration retention steps they follow. These include:

  • Leader alignment prep interviews during due diligence to highlight potential risks associated with the acquired leaders
  • “Stay interviews” to identify individual non-monetary retention drivers
  • Post-close leadership alignment meetings to begin implementing any risk mitigation plans uncovered during due diligence
  • Establishment of a “chief of staff” role to support key acquired c-suite leaders
  • Formation of a peer community for acquired leaders to network with prior acquired leaders now part of the acquiring company

Combined, these steps foster cultural alignment, encourage skill building, and advance integration objectives.

Non-monetary retention deliverables

What do acquired leaders want? It turns out they want a lot of the same benefits other employees want, including

  • Work flexibility
  • Coaching/sponsorships/mentorships
  • Development opportunities
  • External education (paid degree programs)
  • Time and resources to participate in leadership events, peer communities, publications, and more

A cascade of benefits

There certainly are challenges in delivering non-monetary advantages, including extensive advance work and potential difficulties in execution. However, several of our roundtable participants enthusiastically confirmed that the lasting loyalty engendered when it’s done right has enormous benefits, far beyond the retention of desired executives and the legacy knowledge they provide.

The overarching goal is to deter leaders from trying, either consciously or subconsciously, to “break” all the great things that made the acquired company so attractive in the first place. And to, hopefully, instill the feeling that their work lives, and the work lives of their employees, have improved since the acquisition.

Author

Senior Director, Mergers and Acquisitions

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