Change Advocacy
Downsizing business: How to manage downsizing employees
Although a merger is usually thought of as a union of two enterprises, the legal definition comes closer to reality: "The absorption of a lesser estate, liability, right, action, or offense into a greater one." And if you are one of the acquirees, unfortunately you have got 75-25 odds of getting laid off.
For employees wanting to secure a positive future, here are some useful considerations and tactics to help survive a merger or acquisition scenario.
Historically, mergers and acquisitions tend to result in job losses. ... However, the management team of the acquiring company will look to maximize cost synergies to help finance the acquisition, which usually translates to job losses for employees in redundant departments.
A business's top leaders, including the CEO, will usually be eliminated or absorbed into the management team at the new business. ... Whether layoffs happen or not, teams may find it tough to learn new processes and merge with other employees who have been working with the parent company for years.
Tips to make downsizing later in life easier
If the company cannot support itself, the owners must consider furloughing employees or selling departments or units if possible. If the owners find that even these steps are not enough to stabilize the company, it is probably time to start downsizing.
There are several reasons a company may downsize: Recession: Poor economic conditions may spur a business to downsize to stay afloat or maintain profitability. Industry decline: If a business's specific industry is facing a crisis due to technological or other difficulties, reducing costs may be a necessity.
Signs That a Layoff is Coming
Layoffs are often a natural outcome of merger and acquisition activity. When two companies come together, there may be overlap in some areas, leading to the decision to eliminate positions. Not every merger leads to layoffs, and in some cases, companies add new jobs when they merge.
M&As can be paid for by cash, equity, or a combination of the two, with equity being the most common. When a company pays for an M&A with cash, it strongly believes the value of the shares will go up after synergies are realized. For this reason, a target company prefers to be paid in stock.
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