One of the most well-known and respected figures in the field of M&A, Alexandra Lajoux explains how turn a merger into a successful opportunity.
With more than 40,000 major corporate mergers and acquisitions (M&A) announced worldwide in any given year–not to mention many more changes-of-control in mom & pops, nonprofits–and governments, chances are high that at some point your career will be affected by M&A.
Whether that effect is negative or positive depends in part on how well you can anticipate, prepare for, and respond to such eventualities. This article defines M&A and lists 10 ways to merger-proof your career by going through a checklist based on the merger process itself. (Note: although true mergers are rare—most deals are merely acquisitions—it is still the favored term to describe any change of control.)
The term M&A covers a variety of situations, but it boils down to a change of ownership and control.
Possible M&A events include:
- The combination of two large equal-sized companies, followed by a name change
- The absorption of a small company by a larger one
- The purchase of a company or company unit by an investment group
- The sale of a company division or product line to a competitor
- A series of small acquisitions in the same small niche amounting to a roll-up
In the typical M&A process on the buy side there are several distinct phases. First comes strategy: an organization’s leadership decides that it needs to strengthen some aspect of itself or correct some weakness, and seeks to buy or combine with a company that can accomplish that goal. Next comes search as it identifies and approaches possible candidates. Then come valuation (determine price points), financing (obtaining funds for the transaction), structuring (accounting, legal, and tax considerations), and due diligence (looking for risks). Next come negotiation (creating an acquisition agreement to meet needs of both sides), closing (signing the deal), and post-merger management, which typically involves integration of resources, processes, and responsibilities. After all this, a company needs to advance into its new future. On the sell-side, any of these may occur for the seller, but generally the focus is on valuation and negotiation (price and terms).
So how can you make sure as an employee that your career will outlast the deal of the day? You can engage in a parallel process as an individual.
- Your strategy. Use your research and networking skills to assess the likelihood that your employer may buy another company or go on the sales block. Envision how you would like to participate in such events and prepare accordingly.
- Your search. If you want to stay with the company, search for a mentor and ally to secure your spot; let your loyalty be known. Think about the title and compensation you want. Conversely, knowing that it is not always desirable or possible to stay, start searching for your white knight employers as a plan B. Where would you go if your company did a postmerger downsizing?
- Your valuation. Become aware of your full value in the marketplace and the moving parts of our compensation package.
- Your financing. Check your own personal financial profile (net worth, debt to equity ratio, income) to increase your ability to withstand a disruptive event.
- Your structuring. A merger event may convert you from an employee to a contractor or vice versa. Prepare for tax consequences.
- Your due diligence. Before choosing whether to stay with a merging company or to go to a new opportunity, do your “due diligence” by studying the past record of the acquiring company.
- Your negotiation. You will need to advocate for yourself no matter what happens. Think of how you can help the company post-merger, and get ready to talk “win-win.”
- Your closing. Get ready to “make a deal” with new opportunities.
- Your integration. Think ahead of how you will fit into the new postmerger structure.
- Your advancement. Beyond this, you might consider the merger process itself as a platform for career growth. Consider getting certified as an M&A specialist working within a company—for example running an integration. You can get creds via the M&A Leadership Council’ CMAS degree. Or consider becoming a certified M&A advisor via the Alliance of M&A Advisors.
If you follow this advice, you can turn the next merger in your life from a risk to an opportunity.
To read more from Alexandra Lajoux check out her new book, The Art of M&A, Fifth Edition.