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Why Executives Leave After Their Companies Get Acquired (And What to Do About It)

    

One of the problems that businesses face when they acquire other companies is that the executives of those companies will often depart. This can be really detrimental since they represent the leadership of that company, which means that the transition will often not be as smooth.

Not to mention that in some cases, the executives may have a lot to do with the creation of the product or service - if you're losing the creative force behind the company, then although you're investing in the company's current products, services and success, you could miss out on the company's potential.

Why do so many executives leave following an acquisition?

The following are some of the more common reasons that executives will jump ship once their companies have been bought out:

  • They don't want to work for someone else - Many executives will be used to working at the top of the ladder. In some cases, they helped build their company because of the independence that it gave them - they had nobody to answer to. This all changes once their company is bought up by a larger corporation. They'll lose some of this independence and will end up having to answer to somebody in a higher position than them. Many executives see this as too big a sacrifice to make and would rather go at it alone then continue with your company.
  • They don't want to change the way they operate - Different companies have different methods and rules for the way they run things. Some executives will not want to change the way they do things. If they have to bend to your rules or your way of doing things, they may choose to leave instead.
  • They don't feel needed - Many executives want to remain an integral part of the company after it's been purchased. If they feel like that they are not going to fit your particular plans for their company, they may not feel the need to stick around.
  • They want to build up another company - Some executives may not want to work for a bigger company and prefer the challenge of building a small company from the ground up. They may feel that staying on board will stagnate their ambition.
  • They need a break - Odds are pretty good that they put in a lot of time and effort building the company you've acquired. They may just be tired and want to take the opportunity to evaluate what their future goals are.

How can you prevent executives from leaving?

In some cases, there's nothing that you can do - especially if they want to take a break or if they're of the type that welcomes the challenge of building a new business from the ground up. But there are a few things you can do to help convince executives to stay on. This includes:

  • Providing them with financial incentives that shows them you want them to stick around and makes it more difficult for them to leave.
  • Giving them a clear idea of what your vision of the company is going to be and how they will be a part of that vision.
  • Promote them within your company - or promise them a path of promotion within your company if they stay on.

It's important that you communicate with the executives of the company you are acquiring so that you can find out whether they plan on staying or leaving. This allows you to determine the best course of action in terms of whether you want to convince them to stay on board or not - and how you can convince them to do so.

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