The Employee’s Guide to Surviving and Thriving During an Acquisition
Imagine you’re working for a fifteen-person startup known for its tight-knit, values-driven, outdoorsy culture, and suddenly, one day, you’re pulled into an all-hands meeting letting you know that your company has just been acquired by a big company headquartered across the country. You may know a little or a lot about this company, but either way, very soon, you will become their employee.
Acquisitions come with a high number of unknowns and are almost always a nerve-wracking time. Some questions that may arise:
- What will change, and will any of it markedly affect my work experience?
- Will the parent (acquiring) company share the same values as my current startup?
- Will my job become redundant and/or will I no longer be needed?
- More immediately, what will happen to my PTO, benefits and will my spouse still be covered on my health insurance?
In every acquisition you should be prepared for potentially negative outcomes, but there are potentially very positive outcomes as well. Don’t let fear overshadow the opportunities.
For instance, you could get a promotion, or perhaps you had equity that you could turn into cash in the acquisition, or there may be an opportunity for you to leverage the value you bring to the transition to negotiate a nice windfall. Acquisitions and their resulting transitions tend to be highly emotional, but there are some ways you can empower yourself to make the most of an acquisition.
In 2015, Analiese Brown was the HR Manager at the time of acquisition of ShipCompliant, then an approximately forty-person SaaS company in Boulder, CO. During the acquisition, Analiese’s role involved helping ShipCompliant through the transition, managing everything from the details of HR to helping employees grapple with the emotional elements of an acquisition.
I caught up with her recently to get her thoughts on going through an acquisition. Here’s her advice…
1. Upon learning of an imminent acquisition, take it upon yourself to learn as much as you can. Analiese learned that the key to successfully navigating a startup acquisition as an employee is to focus on how you can re-frame it from something happening “to” you, to something you have the power to shape to better your future. Gathering information and learning helps you do just this.
While there will be much that you don’t know and can’t know right away, obtain as much information as you can about the acquiring company. Research the acquiring company’s:
- leadership
- financials
- key customers
- stakeholders
I recommend also searching for recent press releases about them and checking Crunchbase and Angellist to determine whether they’ve fundraised and/or if they plan to one day go public. Try to find out what happened when they bought another company; did the founders stay, and if so, how long? How many employees stayed? Some of this information won’t be readily available, but you’d be surprised what you can dig up with some modern sleuthing 🕵 ️
You can learn from internal resources, too. There might be a designated go-to person at your company you can ask questions of, this may be the CEO of your company, one of the founders, or whomever is managing HR or Finance.
You won’t be able to find answers to all your questions, and some information will likely be private. The point isn’t to compile a database of information, the point is to take an active role in what’s happening.
2. For as long as you’re planning on sticking around, commit to doing an outstanding job. Don’t let the shifting sands environment of an acquisition be an excuse not to be a stellar performer.
You need to put in extra effort during this period because upon staying or leaving, you will have new people to impress either at the acquiring company or a new role very soon. Sam Altman of Y Combinator says:
“Most acquisitions are not smooth sailing. Go into it knowing it’s going to be hard.”
Sam recommends employees wait at least six to nine months before making a decision. In many cases, you’ll benefit from staying long enough to fully explore the opportunities present in an acquisition.
3. Empower yourself by becoming actively involved in the transition. Your company may form a group of employees who are interested in shaping the transition. If there are ways to get involved, you’ll have access to information and will be in a place to shape the transition process.
Every acquisition and integration is structured differently — the more you can be actively involved, the better chance you’ll feel positively about the outcome.
Sam Altman recommends adopting the mindset of “bridge builder”. “You don’t want two warring factions,” says Sam. “You want the new company to support you and you want people to like each other.” He advises making it your personal business to develop strong relationships with as many people as you can at the acquiring companies and be a bridge as tensions inevitably rise.
4. Give up on trying to keep things the same. Things will change. That’s a given. The only thing you can control is what you do about the changes.
Take time to mourn or celebrate the startup experience you had, and then roll up your sleeves, learn, and decide whether you want to stay and/or if you need to go. Sam Altman says that often agreements will be reached with acquired companies to stay fairly autonomous, which can be a great thing if you already like your work and its processes:
“I would push the founders to make sure you got such an agreement to operate as independently as possible.”
Unfortunately, even if such an agreement is reached, the reality of what “staying independent” looks like can be vastly different in each scenario. There may be certain processes like vacation time or required internal systems that will bend towards the parent company’s way of doing things. Be prepared for this outcome, but keep an open mind, they might also have better perks than you currently have.
5. Determine whether the new reality aligns with what’s important to you, and determine which things are non-negotiable for you. Analiese recommends reading What Color Is Your Parachute?, a classic career discovery book, which can help you do the crucial work of discovering what’s important and what ultimately will be most fulfilling to you in your career.
Upon deciding to join the company, you probably have evaluated a number of factors that you’ll now have to re-evaluate. This includes:
- preferred geographic location
- office environment you thrive in
- essential company values.
Analiese reminds us that it is a human impulse to fear change. Figure out what’s important to you personally. Are you unwilling to move to a new city? Will you draw the line if the acquiring company doesn’t value inclusiveness?
Analiese says coming back to our own needs and desires provides a framework to evaluate whether the new reality of your acquired company will support and fulfill these things (or not). This personal inquiry is a good checkpoint at many points in your career, but is especially crucial when your company is experiencing major change. Don’t glide into a company you’re not excited about just because you neglected to look for a new job post-acquisition.
6. If you have equity, understand how it works. Understanding the impact to you as soon as you can will equip you with information about whether there’s a choice to be made, or whether there’s an obligation to you around how that is paid out.
If you don’t have equity you may feel the ship has sailed, but there may be some individuals who were very involved in transition or contributed heavily to the company’s success in the recent past who may be then be in a position to be rewarded in some other way. That can be discretionary, but it’s worth having the conversations. If in doubt, consider hiring a lawyer or business advisor who specializes in startup equity; you’ll be glad you did.
You may be acquired by a parent company with bonus or Management by Objectives (MBO) culture and if you’re in a key position, you can negotiate with the parent company for a favorable compensation structure or bonus. If you’re someone integral to transition, whether or not equity is part of your current compensation package, you may have some leverage.
7. Consider negotiating for a new role or a promotion. Incredible, new, and unexpected opportunities can often surface out of an acquisition. It may not even be something you have to ask for; you may see a restructure and be asked to take on a new role, or perhaps travel more or be based out of an office in a more desirable location.
Often larger companies acquiring smaller ones may have more well-articulated career paths, or may look at the role you’re doing in a new way. At smaller companies, you may be a Jack or Jill of all trades, but upon acquisition, you may find that in this new reality, your multi-faceted role puts you a peg higher in an organizational chart.
You may also find that you are qualified to be in a higher-level role, and the acquiring company will likely have more funds or resources for learning and development. This may include going to conferences, workshops, or perhaps an internally-created leadership development program. There may also be more structured rewards and incentive program.
In the early post-deal stages, Analiese reminds us that it may not be totally clear what new career paths will be available or who will be impacted and how. Analiese says, in an ideal scenario, managers are a good first line of contact to ask for information and discuss how you’ll be impacted along the way. Hopefully, your manager will have the inside track, or be able to point you toward the right resources, to explore promotions or other opportunities.
A learner’s mindset is the best way to survive any uncertainty.
If you’re facing an acquisition, adopt a learner’s mindset and find ways to become an active participant in the transition. Your goal is not to try to resist the change or preserve status quo, but to understand what the new scenario will be and to determine if the new company “reality” aligns with your values and needs.
The acquisition of your startup can be an incredibly powerful catalyst for your career and personal development — don’t forget to enjoy the ride.
