Chau Woeste and Neelm Mahmood provide their three top tips for retaining key talent following a merger or acquisition.
If you’ve been keeping up with our series of blog posts on the human side of the deal, you’ll already know why we think retaining talent is so important to realising the deal value. For many investors, a key reason for purchasing a company is to access to new technologies/digital solutions which is deeply dependent on the target’s talent pool.
Companies often put a considerable effort into engaging and retaining employees they’ve identified as top talent – those they believe embody the IP of the business they’re acquiring. But losing key talent can impact an acquisition and could prevent you from reaping the full rewards. A global talent retention study conducted by LinkedIn discovered employee turnover didn’t stabilise until four years after the deal causing shareholder value to continue to erode. The sooner it settled down the better for performance.
The talent drain is usually highest in Year 1 – this is when most people make the decision to stay or go. For many, the uncertainty around a deal gets them thinking about their careers and looking for the change they’ve been putting off for some time. Others will be concerned about how their roles and ways of working will be impacted. All of which is exacerbated presently with employees suffering the underlying stress caused by the pandemic and anxious about what their jobs will look like when we return to some sort of normality. Finally, we often see competitors being more active and ready to poach top talent, taking advantage of the deal uncertainty.
So, how can you retain talent during and following a merger and acquisition: