At some point in your career, it's a safe bet that your employer will get acquired. Indeed, more than 250,000 private U.S. businesses are acquired or sold each year, and that figure will climb to 500,000 private businesses as baby boomers age out of the market, according to Business Renewal.
So how can you -- the employee -- prepare for the day that your employer gets acquired? NerdWallet says these are the five steps you need to take:
- Prepare for a future elsewhere;
- take inventory of your equity plan holdings;
- consider an IRA rollover;
- pay attention to changes in company benefits; and
- talk to your advisor.
I'm not dismissing those steps. They're important. But they only offer half of the story -- the downside half. Those steps reflect fear, uncertainty and doubt (FUD). But what about potential "upside" when your employer gets acquired?
Study the Potential Upside
Yes, there could be upside for you. To get a feel for that potential upside take these five steps:
1. Study previous deals: Did the buyer previously acquire any other businesses? If so, did employees from the acquired company stick around and did they earn promotions over time?
2. Study the financials: If the deal involves publicly held businesses, what was the financial strength of each business ahead of the deal -- and how will a business combination potentially help both parties? If the deal involves privately held businesses and no financials were released then do some deeper dives. Poke around Glass Door to see if employees are happy -- and reasonably compensated -- working at the acquiring company. Just remember: Don't get too overwhelmed by negative steps posted on Glass Door. After all, negative folks tend to "out shout" positive folks on company rating sites.
3. Listen Closely (Really Closely): During an M&A deal, sometimes employees can earn "retention" bonuses for sticking around a year (or more). Find a tactful way to ask HR, "What's in it for me?" But don't sound like an arrogant SOB asking "what the h*** is in it for me?"
4. Look Closely (Really Closely): Is there a well-organized integration plan as part of the deal? Or will details take months and years to sort out? A buttoned-up plan may be a sign of good things to come. Also, are the owners and/or key leaders sticking around after the deal is finalized?
5. Stay Optimistic: Sure, it's wise to update your resume and listen for opportunities elsewhere. But within the halls of your employer always maintain a "glass half full" mentality. Remember: The buyer didn't acquire your employer to destroy the business. Fact is, they acquired the business to build even more value. Play a role in that value creation, and chances are you'll be rewarded...
What Defines Success?
Ultimately, you want to determine how the buyer will define success for the acquisition. Take, for instance, Dell's $67 billion buyout of EMC. During a May 2, 2016, Q&A with ChannelE2E and other media, Michael Dell said a handful of metrics would define the deal's success or failure. They include:
- Customer satisfaction and net promoter score.
- Employee satisfaction and net promoter score.
- Product innovation pipeline.
- Relative market share in the places Dell-EMC (to be called Dell Technologies) competes.
"If we're gaining share, our product innovation pipeline is strong, our team members are happy, satisfied and engaged; and our customers are happy satisfied and engaged we'll have a great business," Dell said.
Here's a closer look at the conversation with Dell:
Video linkNow, apply that specific example to the company buying your employer. Has leadership defined the key variables for success? And if so, how important a role can you potentially play in that success?
Once you answer those questions you'll have a much better feel for potential upside opportunities -- or downside challenges -- that await you.
