Spring 2016 issue of Horizons

PRIVATE EQUITY

Talent Retention Post-Acquisition: Strategic vs. Private Equity by Jeff Barnes, CFA & Chris Milano, CFE

A nother record-setting year is on the books for mergers and acquisitions activity. The Wall Street Journal reported that the dollar value of global mergers and acquisitions activity in 2015 reached over $4.304 trillion, edging out the previous record of $4.296 trillion set in 2007. And now that the ink has dried, acquirers should be well into their integration activities. After all, integration is often the first and largest hurdle to achieving a deal’s stated value proposition. In working with many buyers, we’ve learned about some of the most common, and successful, ways in which acquiring entities retain and motivate their new employees.

As we begin, it is important to preface that the groundwork for most of these practices should already be underway prior to closing. The retention of key talent is crucial to the success of any deal. Yet time and time again, post-acquisition retention and engagement are unsuccessful in practice. So the question is why? The simple answer is that it depends. Businesses are complex and unique entities, and what works for one may not necessarily work for the next. However, two factors to focus on to help ensure key talent is retained for any company are planning and communication, two factors which work together, hand-in-hand.

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