Getting acquired!

Ann SaravananCorporate LifeLeave a Comment

Mergers and Acquisitions

This is mostly relevant to a tech company. Also, this is in continuation with the article I had written earlier:

Working with Startups

According to my exposure there are two types of startups

Type 1 – Start ups designed to be sold quickly when it reaches a level of growth
Type 2 – Startups which are intended to be held, grown and go public in later date

In my case, all the startups I have worked with had fallen into the Type 1 category.

When do startups sell?

A startup’s value lies in its ability to grow. Once you are approaching a plateau in terms of growth may be the promoters would like to sell. And the best deal you can get when you sell your startup is when you really do not have to sell!

The news of your company getting acquired can reach you in two ways:

• Through the grape vine
• Or through an announcement in the media

If you are a tiny / small fish, getting acquired by another medium sized company, mostly you will get the news through the grape vine. So life is going smooth with the startup company you are working. May be it has become monotonous with salaries remaining stable and you are thinking of moving to greener pastures as it is getting very predictable and boring! And then you see some changes in the way your organization is functioning:
• The promoters may get very secretive suddenly. They may get interested to know about the “talks” going on in the office. You may find the same questions asked to different employees in the office and makes you wonder what is happening?
• You may be requested for various data relating to your operations from the start of the company like – attrition, analysis of attrition, average length of stay of employees in the office, educational level / background of the employees, salary details, benefit details etc. Also about company assets, agreements which is entered into with the customers, service providers and vendors and details of revenues from the customers and your financials.
• Till yesterday your company would have been a flat organization without any managerial positions and not much managerial job. Now there are some levels getting introduced in the organization. Whether you like it or not you are given a title called manager and will be having a couple of guys reporting to you. Your job doesn’t change much. You are still doing the same technical stuff and you are still unaware of your reportees salary. ????
• You never had a contract with your company and suddenly, company realizes it is good to have a job contract with you with a one year lock in and with a non-competitive clause.
• All your licenses become legal !
• You see unusual traffic to your office mostly senior executives from companies which may be one of your clients / competitors / legal firms.
• If you are senior enough, you get to present your area of expertise to the visitors too.
• You may also get face time with the visitors in case you are in a relatively senior position. The range of topic of discussions can range from the “dot” on your forehead to the working culture of your city. ????

If you are a reasonably sized company and is getting acquired by a big company, you may be caught unawares. You will just get an email from the outgoing CEO announcing the sale mostly on a Friday evening and wishing you all the best. Then the media takes over, analysts will follow with the positives and negatives of the deal, legal companies crop up and gets in touch with the share holder to sue the company etc, etc. In middle of all these you will be sitting with an unexplainable fear and excitement!

But if you watch carefully the pattern in which your company is operating, you can recognize the signs that your company is getting ready for a sale. The below can be among them:

• You may never get a long term vision from your management
• Your product pipelines are not very well defined
• No common policies across the globe
• No efforts to build in a common culture across the different centers if you are a global company
• You may see your company acquiring other small companies to “fill” in the gaps in your product line, so that it will be attractive to big players in the same domain
• Watch the board of your company – You may find new inductions who may be experts with past experience in selling / merging companies
• You will see lot of efforts in pushing up the share price
• Generally, you will get a feeling that the company is fattened like how you fatten the lamb before you send to the slaughter house. ????

Emotions of an employee of the acquired company:

In most of the situations the first reaction will be surprise. The Surprise can then lead to excitement. You try to get more and more information about the company, products, markets, leaders, culture, policies and of course you will start monitoring the share price if the company is listed. You will try to find out who may be your future manager, try to talk to your friends / acquaintances working in that company to get an idea about the company. Each working day in office will start with a new story which is brought in by someone which may be true / false / exaggerated version of the reality! You may also hear stories about the acquired company planning to give you a retainer ship package. You are lucky if it is true. Mostly it is a wishful thinking of some idea generators.

And then the reality sinks in. Human tendency at this point is to recognize only bad news. You start to get anxious about your position / your pay in the organisation. If you are acquired by a past competitor you tend to get rebellious too. If you are in complimentary position you may feel more at ease.

Tips for employees of the acquired company

• Feeling anxious / agitated / frustrated / angry / tensed is normal. Do not take any decision in hurry. Give time.
• You may feel that you do not have all the information you need from the company which acquired you. This too is normal. The company also needs time to share and percolate their view point and policies.
• Follow only official communication. The management will be transparent and truthful in most of the situations. Do not believe in hearsay.
• Do not panic even if you hear stories about layoffs. Mostly the layoffs will happen at very senior levels where they are protected by compensations and golden handshake packages.
• Technical talents are normally recognized, appreciated and valued. The acquired company also will be eager to retain talent to continue the smooth operation.
• There is a risk of layoffs for support teams when integration happens – Administration / IT / Finance/ operations / HR. Mostly you will get sufficient notice from the new management in case there is a risk for your job. But be aware of this.
• If you cannot cope up with anxiety related to uncertainty, take action which will suit you. Living in stress will spoil your health.
• Approach the new company with open mind. Give them a chance.
• If you find it difficult to cope up with the new company, look for another job. There is no point hanging on without full commitment. Staying in the company unhappy is detrimental both for you and the company.
• Remember that change is the only thing which is constant around you.
• Finally, your attitude matters!

Are you the acquirer? Some pointers for you too below:

• Try to be as transparent as the situation allows you. This will allow to keep rumors and false information percolating into the new company at bay.
• Refrain from making off hand remarks to your new employees. Even a casual remark can upset the people. Remember they will be looking forward for each and every word coming from your mouth.
• Decisions you are making if explained logically will be very much appreciated by the employees.
• Remember that majority of your employees are technical guys whose business outlook and sense may be poor.
• Engineers are sentimentally attached to the projects they are working on and are not bothered / aware of the financial implications of their projects on the company’s bottom line. You may have to educate them on this aspect especially if you are planning to scrap the ones they are working on.
• Keep the ambiguity period as short as possible.
• Share your vision and long term goals
• Deliver the promise if you had made some
• Train new employees in your culture and guide them constantly
• Communicate, communicate, communicate!

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