Means to Retain Key Talent in International Mergers and Acquisitions

Abstract

International mergers and acquisitions (M&As) have been a common way for companies to gain international expansion. For over two decades companies have gained experience from M&As but still remain unaware on how to make them successful since over half of these ventures end up reporting failure. Many reasons exist why this happens such as the differences in organizational strategies, cultural differences or managerial differences. All of these differences may lead to unsuccessful retention of talented employees. Many M&As are executed in order to gain knowledge. Talented employees lie in the root of this knowledge and if their retention fails the M&A is likely to be unsuccessful.

The aim of this thesis is to explore how the acquiring firms seek to retain key talent of the acquired company and if the theory of relative standing is used in this process. This study concentrates on the acquiring companies and interviewees came from the acquiring companies. The six interviewees had all been involved in integrating an acquired company from another country to their operations.

The study shows that companies use non-financial and financial incentives in retaining key talent after M&As. The use of different bonuses, long-term contracts and stock options were almost as popular as autonomy and status bestowal. Communication was an important mean to retain and avoid cultural conflicts. It was also the most common mean to retain other than key talent. A couple of new means emerged from this study. Some companies emphasized the training possibilities and new job opportunities in other locations of the organization. The study also showed that not enough attention is put on the size of the acquired company and social climate of pre-acquisition negotiations.