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Mergers and Acquisitions: How to Reduce the Risk of Being Made Redundant

According to Professor Scott Moeller, research clearly indicates that some people are more likely to succeed in a merger or acquisition than others. In this article, he shares some critical factors about the individual and the company that will determine whether you are more or less likely to be made redundant when your company combines with another.

by Professor Scott Moeller

Mergers and acquisitions (M&A) have a life of their own. Employees and managers alike often feel like pawns in a chess game. The unfortunate fact is that no one, not even the chief executive officer (CEO) of the company, can control the changes taking place once an acquisition or merger has been announced.

Layoffs are inevitable
The situation could be one of many options – it could be two companies merging; a big company taking over a smaller one; one company buying a division of another; or a hedge fund or private equity firm acquiring a start-up or failing firm.

No matter what the form of the merger and acquisition deal, one of the first things that happens is an announcement by the new management that there will be a round of layoffs. Employees are fired and sometimes whole teams are made redundant. The official announcement will typically say that somewhere around 5–15% of the total workforce of the two companies will be made redundant.

This is a major issue for the Human Resources department (HR) to manage. If HR can identify which groups of people are more likely to be made redundant, then they can focus their attention on those groups for redundancy and deal differently with the people who are likely to remain.

The focus of this article is, however, on how individual employees can identify whether they are more or less likely to be at risk of redundancy; and what they can do in an effort to survive.

Be prepared!
Many books have been written about how companies can be more effective at merging, focussing mainly on the organisation, longer-term strategic positioning, cultural integration and the financial results of the proposed M&A deal.

This article is based on a chapter of my book called, Surviving M&A: Make the most of your company being acquired, published by John Wiley & Sons in July 2009. The book is intended for use by individuals as a guide on how to exploit a situation of corporate change which, in this case is caused by a pending M&A deal, for personal benefit. It shows why everyone should be properly prepared for their company being acquired unexpectedly and discusses whether you are more likely to be at risk of redundancy following a merger or acquisition. Most of the book is about what individuals can then do to reduce the chance of being made redundant if they are at risk.

Over 350 people were interviewed for the book. Most were in Europe and the USA, although many had worked in multiple locations or had started their careers elsewhere, whether it be Asia, South America, Russia and the former Soviet republics, Australia and Africa. From my own experience of over 30 years of working in the M&A area, extending across four continents including South Africa and several countries in northern Africa, I have found remarkable consistency no matter where I was.

Traditionally, HR professionals came to M&A deals relatively late, so it is difficult for them to have much impact on the process itself. Their entry into the deal typically starts at the time or even just after the deal was announced. They thus have limited involvement pre-announcement. The planning of human resources issues is notably lacking early on, making it even more critical for individual employees to understand where they stand.

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