How to Survive a Merger or Acquisition

The company I work for recently announced a joint venture with a much larger company, although in reality it's probably an acquisition. My firm does a few hundred million dollars in annual revenue with 900 employees; the other firm is almost twenty times our size. They outsource their entire IT organization; ours is almost entirely in house. We looked at outsourcing our IT to the same company that manages their IT a few years ago and decided to continue to run it ourselves. We felt we would get better service and could do it for about 20 percent less than what it would cost to outsource.

I manage the IT infrastructure and have about 30 employees who work for me. They are all very dedicated, and I wouldn't change any of them. We regularly pull off the impossible, and our executive team thinks highly of us.

So when the joint venture was first announced, one of my newer employees asked me, "What does this mean? What should we do?"

I've been through a few acquisitions during my twenty year career in IT, so I shared my perspective with my employees. As more companies contemplate M&A activity as a way to weather the economic storm, employees need to prepare themselves for change. Here are my secrets for survival.

Plan for the Worst
The worst thing that can happen is that you get fired and don't get any severance. You're more likely to get some kind of severance package in the event you lose your job.

Knowing your future finances may be uncertain, look at your bills and income. If you can pay all of your bills with savings and you are sure you can start a new job in a month, you probably don't have to worry about your finances too much.If you can't pay your bills you need to figure out what bills you can get rid of, like a membership at a local club and which ones you need to survive like the mortgage and groceries. You don't have to immediately sell off all of your worldly possessions, but you should make a list of what you could sell if you needed to free up some extra cash.

If you're looking for work, consider trying something new. I've thought about going into sales, but I haven't been daring enough to quit my IT job to try it. Of course, if I were already out of work, I might have more incentive. I've also thought about starting an IT services company. I've known many people who've ended up doing something completely different after losing their job and who were grateful that they got laid off.

Plan for the Best
The best case scenario if you want to keep your job is that you get promoted to lead a new group (or the same group that suddenly is much bigger). Give some thought to how you would manage it. How would you structure your new team? What would the budget look like? Which systems or applications would you keep or get rid of? Investigate as much as you can what each company has for technology.

Question everything including: are we organized properly? Should we merge with other departments? Can I do work outside of my current job function? Have answers to all of these questions. It's a safe bet that someone else is questioning everything, so you need to be prepared with the answers.

Document how you can save money, improve services or otherwise provide value. In my case, I have the proposal from when we were considering outsourcing that shows we are 20 percent cheaper than the IT services company to which we would have outsourced. In addition, I calculated how much running the IT infrastructure would cost for offices of various sizes, how many offices I think the company with which we entered into the joint venture has, and what the IT organization would look like. I also calculated based on the proposal I have from the outsourcer what I think the other company is paying for services.

Make sure you highlight your assumptions about how you will get your cost savings and what the new organization might look like. You will have time to tweak the plan as the structure of the joint venture or merger unfolds, but if you are way off and don't explain how you got there, you may do more damage than good. If you assume you can in-source everything, but the contract is ironclad for three more years, you aren't going to be able to save 20 percent.

Prepare Your Elevator Pitch
In my case, I know I can save the new joint company 20 percent in annual IT operating costs. That's my pitch: "You let me run this; I'll save you twenty percent." In this case that's pretty close to $25 million (about Rs 125 crore) a year.

Let Your Executive Team Know You're Ready
I'm assuming that your goal is to keep your job. If that's not the case, let the executive team or your management know that you don't have a problem leaving the company. You don't want a manager fighting for your job if you are hoping to get a severance package.

On the other hand, if you are looking for more responsibility, now is the time to mention it. Give your manager your elevator pitch and present him or her with your plans for how you would structure the new organization and save the combined company money.

Wait

Update Technical Documentation
Even with the best plan and a solid pitch, you may not even have the chance to discuss it with the new executive team. They may have already made their personnel decisions. While you are waiting to see what the outcome of the merger, acquisition or joint venture is, update server and password lists, processes and procedures, and disaster recovery plans.

People remember what you were like when they worked with you, even if it is only during a transition. So by putting all this thought into a plan for how the new organization would work - even if it doesn't get implemented, you look prepared and professional and that increases your chances of being kept on staff.

This is always the hardest part. Try to avoid gossiping and speculation. Focus on the work at hand. Of course, it doesn't hurt to do some networking while you are waiting for the outcome of the merger or acquisition, but avoid jumping at the first job that comes your way. Many times people get promoted during acquisitions and some get retention bonuses for taking on the risk of staying with the company.

Rich Casselberry has held a number of IT management positions with enterprises, consulting organizations, and in the public sector during his 20-year career in IT. He is the lead author of Running a Perfect Intranet. He has also written 30 Skills Every IT Person Needs.