Employee Turnover in the Context of Mergers and Acquisitions Transactions

Developing a Guideline to Identifying Turnover Risks and Retention Methods

Master's Thesis , 2021 , 96 Pages , Grade: 2,0

Business economics - Business Management, Corporate Governance

Which factors impact the likelihood and extent of employee turnover after M&A transactions?
What measures can be taken during post-merger integration to retain key players?
This master thesis gathered and evaluated knowledge of experts in the field of M&A regarding employee turnover and employee retention.

The yearly number of worldwide M&A transactions increased from 1990 to 2019 by nearly five times. The yearly average increased steadily over the last decades. The 1990’s averaged about 20.500 deals, the 2000’s 37.000 deals and the 2010’s 46.500 deals per year. (Thomson Financial, Institute for Mergers, Acquisitions and Alliances [IMAA], 2020)
Smith (2002) analyzed 49 studies regarding the success rates of organizational change. Among them were also 9 studies concerning M&A transactions. The median success rates for these transactions stated at 33%, while the median success rate for all analyzed studies in different forms of organizational change, ranging from strategy deployment to general culture change or software implementation, also was 33%.

It should be mentioned that the measurements of success for most forms of organizational change are varying or sometimes not disclosed at all and therefore these results should be taken with caution. A valuable takeaway of Smith’s analysis though definitely should be the assumption that change in organizations is very often accompanied by a myriad of hurdles and challenges.

More recent academic work also backs that statement. Malmendier, Moretti, and Peters (2018) looked at stock performance of winning and losing bidders. They conclude that the entities that lost takeover bids on average outperform the winning bidders by 24 to 37% over the next 3 years.
King, Dalton, Daily, and Covin (2004) come to the conclusion that on average M&A activity does not lead to improvements of financial performance for the acquiring company. Instead, their results show either no or a slightly negative change in performance post-merger.

Table of Contents

• 1 Introduction
• 2 Problem Formulation
• 3 Literature Review
  • 3.1 Distinctions Between and Definitions of Mergers, Acquisitions, and other Forms of Restructuring
    • 3.1.1 Differentiation by Economical Background
    • 3.1.2 Differentiation by Legal Background
    • 3.1.3 Differentiation by Willingness of the Takeover Target
  • 3.2 Due Diligence
    • 3.2.1 Financial Due Diligence
    • 3.2.2 Cultural Due Diligence
    • 3.2.3 Human Resources Due Diligence
    • 3.2.4 Organizational Structure Due Diligence
    • 3.2.5 Management Due Diligence
    • 3.2.6 Other Types of Due Diligence
    • 3.2.7 Impact of Due Diligence on M&A Success
  • 3.3 Employee Turnover after M&A - Studies & Reasons
  • 3.4 Post-Merger Integration (PMI)
    • 3.4.1 Integration Planning
    • 3.4.2 Integration Execution
    • 3.4.3 Integration Monitoring
  • 3.5 Literature Review - Conclusion
• 4 Research Methodology
  • 4.1.1 Qualitative & Quantitative Research: A Quick Overview
  • 4.2 Choice of Research Method
    • 4.2.1 Choice of Qualitative Data Collection Technique
    • 4.2.2 Choice of Interview Method
  • 4.3 Qualitative Content Analysis by Mayring
  • 4.4 The Interview Guideline
  • 4.5 Definition of Experts and Chosen Field
• 5 Interview Analysis
  • 5.1 Interview Partners
  • 5.2 Goal and Type of the M&A Transaction
  • 5.3 Differentiation between Employees
  • 5.4 Factors that Impact the Risk of Key Players Leaving
  • 5.5 Retention Measures
  • 5.6 Summary and Discussion
  • 5.7 Limitations of this Research
• 6 Retention Guideline
• 7 Conclusion
• 8 References

Objectives and Key Themes

This work aims to understand the factors influencing employee turnover after M&A transactions and to develop a guideline for identifying turnover risks and retention methods. The research focuses on the importance of retaining key players in the post-merger environment.

• Employee turnover in the context of M&A transactions
• Identifying turnover risks and retention methods
• The impact of key player retention on M&A success
• Development of a guideline for managing employee turnover after M&A
• Qualitative research methodology and content analysis

Chapter Summaries

This section provides summaries of the key themes and arguments discussed in each chapter, excluding the final chapter and conclusion.

• Chapter 1: Introduction - Introduces the topic of employee turnover in the context of M&A transactions and highlights the negative financial impact of such turnover.
• Chapter 2: Problem Formulation - Defines the research problem and objectives, focusing on the need for a guideline to address employee turnover risks in M&A transactions.
• Chapter 3: Literature Review - Provides a comprehensive overview of relevant literature on M&A, due diligence, employee turnover, and post-merger integration. - Explores different types of M&A transactions and discusses the importance of various due diligence processes. - Examines existing research on employee turnover after M&A and its causes, highlighting the need for effective retention strategies. - Covers key elements of post-merger integration (PMI), including planning, execution, and monitoring.
• Chapter 4: Research Methodology - Outlines the research methodology employed in the study, including a discussion of qualitative and quantitative research approaches. - Justifies the choice of qualitative data collection technique, specifically interviews, and the chosen interview method. - Explains the methodology for analyzing qualitative data using Mayring's content analysis framework. - Presents the interview guideline used for data collection. - Defines the criteria for selecting expert participants in the study.
• Chapter 5: Interview Analysis - Presents the analysis of interviews with experts in the field of M&A and employee turnover. - Discusses the characteristics of the interview participants and their experiences with M&A transactions. - Explores the factors influencing key player turnover after M&A transactions, such as organizational culture, compensation, and career opportunities. - Analyzes the retention measures implemented by organizations to mitigate key player turnover. - Summarizes the findings of the interview analysis and discusses its limitations.
• Chapter 6: Retention Guideline - Presents a comprehensive guideline for identifying turnover risks and implementing retention measures in the context of M&A transactions. - Provides practical recommendations for organizations to effectively manage employee turnover during and after mergers and acquisitions.

Keywords

Key terms and concepts related to this work include: M&A transactions, employee turnover, key player retention, retention measures, due diligence, post-merger integration, qualitative research, content analysis, and expert interviews.

• College: FH Vienna
• Grade: 2,0
• Author: Florian Jung (Author)
• Publication Year: 2021
• Pages: 96
• Catalog Number: V1152762
• ISBN (eBook): 9783346543233
• ISBN (Book): 9783346543240
• Language: English
• Tags: Employee Turnover, M&A, Retention, Mitarbeiterfluktuation