Getting acquired – the sometimes ugly truth about the motivation of your Execs

It happens.  Especially in larger corporations where you may be insulated from what Senior Execs are thinking:  you think you’re doing a good job, positioning the company, giving market input into product strategy… and then… BAM!  Your company is sold and you and your brilliant ideas may soon find yourselves homeless.

I was inspired to write this post from personal experience, and because of the recent web site banner above that someone brought to my attention. (note: I have nothing personal against anyone at Savvis or CenturyLink).  It  just struck me as extremely odd that the headline occupying primo space on the web site was about the PRICE of the transaction, and not what it means to CUSTOMERS of Savvis or  CenturyLink.  As a Product Marketer, that makes me cringe.

Maybe if I’m in Product Marketing or Product Management at Savvis and I have 40,000 options at $15 (last July’s price), then I’m pretty happy.  But if I was busy planning my next technology and marketing road map, and I haven’t been through this type of thing before, I may feel a little betrayed or blind-sided.

My advice: get over it. 

If there’s anything I’ve learned as to what motivates senior management (including the Board) it’s one thing: money.  Whether your company is growing rapidly, or  in the dreaded “death spiral” (slow business erosion) – if  the right offer comes along, your Execs will take it (or be pressured by the Board).  If you’re at a publicly traded company, it’s their duty to do what’s in the best interest of stockholders (including themselves, of course).

“This sucks. But what can I do about this?”

People don’t often realize that – if you’re good at what you do and are in demand – you only have negotiating leverage before accepting a job.  But if it’s a plausible scenario that your company get acquired, you need to protect yourself by negotiating the following, since most top employees leave within a year after the acquisition:

  • Ask for the max  stock options up front – sometimes your hiring manager’s hands are tied, but sometimes there’s some wiggle room.  Get the best deal you can.
  • Ask about acceleration clauses – stock option agreements sometimes have “acceleration clauses” that immediately vest 25 to 50 percent of your options in case of acquisition.  If they don’t have this, ask why not?
  • Ask about employment contingencies in case of acquisition – unless you are in R&D or a top sales person, you are probably expendable to the new company.  Not fair, but it’s reality.  Ask to see if the employment agreement you sign can have a clause that promises you employment for 6 to 12 months (or a similar severance package) in case of acquisition.  Many companies don’t like this because it makes the company harder to sell, but hey,  you have to look out for yourself.
  • Read non-compete clauses closely – in your employment contract.  If you lose your job in an acquisition, an obvious place to go is the competition – and companies know that.  So there’s often a clause that says you can’t work for  anyone the company considers competition for a year or more after you leave.  This is hard to enforce in some states, but you should be aware of this and use it as leverage to get a contingency clause.

You’re probably stuck with whatever agreements you have now with your company, but for future reference take heed of the advice above.  Some Senior Management teams actually do look out for their employees in case of acquisition.

But don’t count on it.

Note: Special thanks for this advice from my buddy Todd H. who has done very well for himself as CFO in several successful ventures, and  for  my old boss Brian M. who actually did look out for me. Go Caps!

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2 Responses to Getting acquired – the sometimes ugly truth about the motivation of your Execs

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