Acquisitions: Career Friend or Foe?

If Amazon can buy Whole Foods for (only) $13.7B, will your company be next?  Microsoft bought LinkedIn for $26.2B; Netflix, Twitter, GoPro, T-Mobile, and Sears are likely 2017 targets.  Every company (even yours) is for sale.  It’s simply a matter of price.

There were 4,951 acquisitions in 2016, the third greatest number on record (mergermarket.com).  2017 appears to be on track to exceed this number.  Public companies have $1.5T in cash on their balance sheets.  Banks and private equity firms have plenty of cash available to finance acquisitions.  The stock market is around a record high, and companies tend to buy other companies at market peaks.  The President’s policies regarding mergers and acquisitions are unclear, but there is likely to be less focus on anti-trust.  So, there is a reasonable chance that you will be affected by an acquisition this year, and a very high probability over your career.

If you are affected by an acquisition (or if you are just considering your job security in general), here are some questions to ask yourself.

First, are you with the buying company or the company being acquired?  It is obviously better to be on the acquiring side where key staffing decisions are made.

Second, what kind of acquisition is it?  McKinsey (The Six Types of Successful Acquisitions, www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/d-6-types-of-successful-acquisitions) describes six (duh!) types of acquisitions that tend to be successful, with differing career implications for each.  These are: improving the performance of the target company, removing excess capacity from an industry, creating market access for a product, acquiring skills or technologies more quickly or at lower cost, exploiting a business’s industry specific scalability, and picking winners early.  If there is any talk about reducing overhead, improving margins and cash flow, or removing excess industry capacity, you are in obvious danger.  Where do you fit in these scenarios?

Another key question is whether you are in overlapping or redundant functions, generally including any administrative or “overhead” departments.  These are often the first to go.

Are your manager and her/his chain of command safe and very well connected?  If so, you may receive some cover, but there are always surprises when the political winds change.

Do you have a particularly unique and valuable skill?  And is it recognized as such?  These tend to be in line departments- engineering, technology, major account sales, possibly some critical operations arenas, etc.  This question deserves some serious thought whether you are being acquired or not.

Do you have prior M&A experience?  If so, you may be seen as a valuable asset during the transition.

Do you have strong networking connections into the acquiring company?  This presumes you have focused at least some of your time and energy on professional networking, so you have already built your industry bridges.  (Again, general career advice implied here.)

Lastly, is it time to be looking for a new opportunity anyway?  No matter what your answers to the above questions, acquisitions bring uncertainty to your career, and this uncertainty may be enough to tip you into action.

Unless you have received a two or three year contract from your new employer, acquisition activity is the time to do some serious career thinking.

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