About company takeovers – and those taken over (Part 1)
According to Manager Magazin, more than 2000 German companies were acquired in 2021 – despite Corona.(1) This not only involves huge financial transactions, but also employees who suddenly have a new employer on “D-Day”. And – in contrast to changing companies by applying for a job – they did not choose it themselves.
In my professional life, I have experienced takeovers at all my employers and have made the experience that not all takeovers are the same. In my professional career alone I have gone through:
– The sale of a German family business to a larger medium-sized company.
– The sale of a company with branches in German-speaking countries to an American company.
– The sale of an American company to a (much larger) Indian company.
– And the sale of a division of the Indian company to an American company.
The possible reasons for a sale are manifold: the owners are approaching retirement age and have no successor, there are financial problems or new business ideas that need to be financed with the sale of the “old” business – or the realisation that further growth alone is no longer feasible.
When it comes to the other side’s motivation for the takeover, it usually boils down to one of the following two:
1. the takeover candidate offers a product or service that the own company has not offered so far, thus expanding the portfolio.
2. the takeover candidate offers precisely the product/service that the own company also offers (possibly in a country where the acquiring company is not yet active). This enables further growth by taking over the customer base, possibly gaining know-how – and in this way one is shot of another competitor.
In one of my category 1 takeovers, the integration phase went very peacefully, because the employees and management were completely taken over and transferred to the structure of the new company as a new business unit. However, we all asked ourselves “What on earth do they want to do with us?” and we couldn’t shake the feeling that we were acquired in the same way that someone with pronounced shopping tendencies buys a red handbag: “I already have a brown one, a black one, a blue one and a white one – I just don’t have a red one yet!” In the end, we as a red handbag didn’t really match the outfit either – and got blamed for it.
Category 2 takeovers have the advantage of your not having to first fathom what the new employer is actually up to, because you understand the business and sometimes the processes are not so different from what you already know. The disadvantage, however, is often that there is not a place for all employees in the new company. (Experience shows that the managerial ranks are more at risk than the business departments). Even if you don’t not have high expectations, it is still bitter to be sorted out by the new management according to the criterium “Do I still need this or can it go?“
Those who can and want to stay in the new company have interesting weeks ahead of them. There is hardly anything more packed with suspense than the integration phase after a merger or acquisition. More about this in Part 2 next Friday.
(1) Manager-magazin.de 21.12.2021
Original text: BBR
English translation: BCO
- Texting and not speaking to him: Stockphoto / Mihailo Milovanovic