How To Develop A Retention Strategy Early In The Process During A Merger Or Acquisition


The long-term success of mergers and acquisitions depends on many factors. One of the most important success factors lies in how the new organization retains its employees and builds the efficiency to get the work done. The high percentage of mergers and acquisitions that fail during the first period after the transaction has motivated mergers and acquisitions advisory firms to look into what makes the difference between a successful and a failed merger or acquisition. Here are some of the methods and tactics used successfully to retain employees after the merger or the acquisition deal is closed:

  • Retention agreements: most successful acquirers have important employees sign retention agreements in the early stages of negotiation. Conversely, many unsuccessful organizations start preparing such documents only after the merger or the acquisition is complete.
  • Retention bonuses: while money is an essential motivational tool, it is not the only one. The most efficient retention agreements include not only retention bonuses expressed in money but other benefits that make it attractive for talented employees to stay.
  • Individual performance evaluations: implementing a company wide evaluation strategy takes time. Organizations that stay successful after a merger or an acquisition usually stick with individual metrics for the evaluation process until a new corporate evaluation process is established.

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