Any takeover creates distress, but smart companies minimize the impact.

Layoffs are stressful, but being on the underdog side of a merger or takeover adds an extra level of anxiety. Piled on top of the uncertainty of not knowing if you will have a job is the apprehension that even if you do, it will be with a new company. Surviving a merger is like taking a new job, but without the normal honeymoon period.
When I asked people about mergers and takeovers they had endured, their responses were emotionally charged, even though some of the events had taken place many years ago. The replies covered mergers of tiny companies and majors, service companies and oil companies. Several people had been through three combinations and compared the experiences. "Been acquired three times, and it has always been a messy and ill-thought-out process," said one respondent.
The responses also revealed integration is more than just a new organizational chart. "More effort needs to be placed on how the work gets done and how it is judged," another said.
First impressions
"The Day One presentations were not very well received because most people felt they were not completely honest," said one employee of a newly transformed company. "Hard feelings were created because many critical questions were not answered."
"There was unnecessary loss of personnel because the acquiring company refused to put in writing (even if they were not going to change) job title, responsibilities and remuneration," another said.
Management wants to maintain control over which employees are retained. However, lucrative merger separation packages from pre-existing anti-takeover provisions may limit the dominant company's control of the situation.
"The relatively attractive severance terms offered to the acquired party made it more likely they would leave. This increased the imbalance in the staffing of the new company, while at the same time losing some of the better talent," one respondent said.
The merged company must woo those it wishes to retain, but the efforts to retain desired employees must be handled carefully. "There was a bidding war for experienced individuals. People who were not subject to this 'courtship' felt that they were not appreciated," said one takeover survivor.
Reduction of benefits or even the perception of reduction can prompt employees to scurry for the exits and create a sense of mistreatment among those who remain. "There was a significant loss of benefits by freezing pensions and replacing the previous systems with a cash balance fund that penalizes older employees," one employee said.
Sometimes the first impression is good, but the follow-up isn't. "The head guy gave all the right overtures, but there was no follow-through." A good first impression is important, but it's not the whole story.
Staffing
How the staffing of the merged organization is handled sends strong messages. "It was important to recognize that people are the biggest asset and that those coming in bring good ideas that should be integrated in the merged company," one respondent said.
"The acquiring company must work hard at appearing to treat personnel from both companies equally. The best sign is if people from each company feel that the other side came out a little bit ahead. That probably means that it was a very fair outcome."
Whether or not the staffing process is fair and equitable, one way to make a bad impression is to stretch out the timing. When people are in limbo and can't plan their futures, every day can seem like an eternity. There were "delays in signing off on the final 'people plan' due to legal reviews. I don't know how this can be remedied, but it kept dragging and dragging and dragging," said another respondent.
In contrast, "We were already in our new group about 1 month after the merger was consummated," said another.
People appreciate having those who know their accomplishments speak for them. "A staffing and selection process was established, which was open and objective. New positions were reviewed by balanced teams from the two companies and by senior management to ensure a balanced result was achieved, whilst attempting to put the best people in specific jobs," said one satisfied employee.
Going a step further, people can represent themselves. "The new supervisors for each general technology area (reservoir engineering and simulation, heavy oil, enhanced oil recovery) conducted meetings in which every professional and technician in that technology area gave a 5-minute synopsis of their current work followed by 5 minutes of discussion. From the manager's perspective, we got to find out what work was in progress in the other organization, and to see 'real people' rather than pieces of paper. This greatly helped the process of 'trading' people to form new groups, which consciously blended personnel from the two organizations. Since we did not know how many people would be terminated, this face-to-face opportunity was very valuable in 'ladder ranking' the people."
People are afraid of being misplaced. "Managers stated up front that not everybody would be placed in the right assignment initially and later they would try to correct that. They did try to find job assignments more in line with the employee's skills," said one respondent.
Cultural mismatches between the companies can adversely affect the staffing process. "The organizational model used was substantially different from that of the acquired party. This tended to undervalue some of the entrepreneurial talent of the acquired party."
The presumption is that the dominant company's staff does better, but that is not always true. "Decisions to retain personnel were based on political motives instead of talent, experience and ability. The acquiring company adopted the corporate structure and sales paradigm of the acquired company. As a result, today, 6 years later, of all the management, sales, engineering and operations personnel in the state, only two of the acquiring company personnel remain today," one employee said.
Joining a new company
"Many years of organizational learning and networking are made redundant, and you are cast adrift to start over," one respondent said of a recent takeover.
When someone joins a new company, there is a honeymoon period. Both the new employee and the company recognize there will be a period of adaptation and make accommodations. In contrast, following a merger, acquired personnel may try to hang onto the status quo and be in denial about the changes they face.
"The bigger merger partner tended to want everything its way instead of truly trying to learn from the junior partner. Initially, there appeared to be willingness to share best practices, but as time went on, the practices of the larger party tended to be the norm," said one employee of a company in transition.
Another said, "It is up to each individual to switch their attitude from one of no control and acquiescence to recognition that: I had a choice; I made the choice; I am confident it is the right choice. I chose to be here the same as if I actively pursued this job opportunity on my own. People in both groups should lose the words 'At XYZ Co., we...'"
Acquired employees value assistance in adapting. "There was a real effort to take new employees from the acquired company and make them feel welcomed and valued early in the joint operations as well as to communicate to all employees a joint vision going forward."
Many aspects of the merged company may be unfamiliar to employees of the swallowed company. "Communication of expectations is key in smoothing the transition. Information on how things work, paperwork flow, lines of authority and what forms to use cuts the stress level from being behind the eight ball because you don't know what is going on," one respondent said.
In some mergers this need is recognized. "The acquiring company made a credible effort to welcome us, value us for the information and contacts we brought with us, and gave us manuals and training to help integration," one respondent said. However, don't count on it. "An operating procedures manual would have been helpful for basic organizational processes," said another.
"Go deeper, build consensus, extol the best and view it as an opportunity to create a new company that has learned from the past and is interested in improving efficiency through better understanding of humanity," another respondent said.
On a personal level, "If you are still standing after the initial cutting, the company knows you have something positive to contribute. Don't be afraid to stick your neck out."
Relocation
Relocation is always stressful, and many people will not consider a move to another city. If companies are seeking to retain skilled employees, they may minimize relocations or take extraordinary measures to minimize the discomfort.
"The two companies had operations in different cities, one was picked for the merged company," said one employee of a then-merging company. "A number of employees refused to move and chose to exit the company, which hurt the merged company who lost key business skills. Some divisions chose to continue to operate in two different cities. This kept skill drain down, but made it more difficult to operate as a merged entity. If a single city is picked for merger reasons, the employees in the other locations should be recruited more than in our case."
To ease the transition, one company offered temporary housing to relocated employees. "Apartments near the office were ready. People did not have to spend time to locate temporary housing or to stay in small hotel rooms," an employee said.
While relocation from one city to another disrupts personal life, office relocation also can be a problem. "Personnel were crammed into an already full building with insufficient computer infrastructure. Subsequently, to fit everyone in, an open office design was used under a thinly disguised rationale of collaborative environment."
Lost documents
In the fruit-basket turnover of a merger, people are not the only valuable assets scattered. Departing employees have little incentive to safeguard records. One of the biggest merger issues is loss of data and data conversion problems.
"Two office moves resulted in lost data," said one employee. "There was no additional filing or library space, so well and lease files were dumped in a warehouse, where they remain 3½ years later."
"To save storage costs, data for lower priority exploratory and development areas were destroyed rather than archived," said another.
"There were tons of spreadsheets, databases, etc. that were not utilized by the acquiring company," said another. "In many cases, the acquiring engineers were not even aware the information existed."
"Digital data were lost or corrupted in the migration between systems," said another.
"In the rush to vacate the acquired company's building, well and lease files were dumped without being inventoried into hundreds of boxes and sent to a warehouse."
Months and even years after the merger, the integration of computer and e-mail systems may not be complete. "Integration of computers and data systems is a serious problem. It's a lot of work with a lot of licensing and administrative pitfalls."
Competitive advantage
Not all mergers produce good business results.
"There was an attempt to balance the cultures of both companies through politics. For instance, the former district manager from Company A ran operations west of the interstate, while the former district manager from Company B ran operations to the east. The war was on for total control of the midcontinent. This led to market share and revenue losses," said one employee.
The takeover "destroyed a tight-knit, very competent technical team. The predator had no expertise in the area and yet tried to manage the team without advice from the team. The acquirer held the assets for only 15 months and then left a remnant company."
Postscript
From one of those who was acquired three times comes this piece of wisdom: "Employees who feel they are mistreated do one of two things - they quit and leave, or they quit and stay. Most mergers as currently practiced leave employees feeling mistreated."
A smooth post-merger transition can make a big difference in the success and profitability of the merger. Recognizing this, many companies put tremendous effort into planning the transition. However, the responses I received indicate there is still considerable room for improvement.