What Happens When Acquired? Changes for the Company's Survival and Employees

1. Changes Brought by Acquisition

When a company is acquired, concerns arise not only about the company's survival but also about its impact on employees and business partners. In many small and medium-sized enterprises (SMEs), acquisitions often involve the transfer of shares, with the company's legal entity typically remaining intact.

Depending on the acquiring company's policies, not only the company's legal entity but also its business machinery, clients, customers, and employees may be retained.

In the case of friendly acquisitions, which constitute the majority of SME M&As, negotiations are often conducted in advance to ensure that significant changes do not occur in company culture, treatment of employees, or working environment.

What happens when acquired? Here are some common changes that may occur when a company is acquired:

1.1. Changes in Management and Organizational Structure

Since management control is transferred through acquisition, there may be a need to align with the acquiring company's management policies, potentially resulting in changes to the management team and organizational structure.

This could involve the departure of existing management from the acquired company and the recruitment of new management by the acquiring company, or the existing management team may remain in place. Various scenarios are possible.

1.2. Changes in Corporate Culture and Atmosphere

When companies with different cultures merge, there is a possibility that the corporate culture and atmosphere cultivated thus far may change. However, in cases where the acquiring entity, such as a private equity fund, aims for the company's growth, the culture and atmosphere built by the company may be respected.

To facilitate integration efficiently, there may be a need to unify or revise the HR systems and benefits for executives and employees of the acquiring company. However, in many friendly acquisitions in SMEs, negotiations are conducted in advance to avoid significant changes in HR systems and benefits.

1.4. Relationships with Business Partners

An acquisition may lead to changes in business partners. In the case of share transfers, contractual relationships with business partners are typically maintained, but decisions regarding continuity or renewal may reflect the acquiring company's management policies. However, the potential impact on business by changing business partners will be carefully considered.

In SME M&As, negotiations are often conducted to ensure that significant changes do not occur in HR systems, benefits, and relationships with business partners.

2. Points for Achieving Smooth Integration After Acquisition

To build a strong relationship with the acquiring company and aim for smooth integration after a company is acquired, it's essential to be aware of the following points before the M&A deal is finalized:

2.1. Assess Compatibility Between Companies and Management

Particularly in SME M&As, ensuring there are no significant gaps in corporate culture, values, and management philosophies is crucial for smooth integration. While considering the synergy of businesses is important when selecting the target company, these aspects are equally significant.

2.2. Emphasize Communication with Stakeholders such as Employees and Business Partners

Determining the content and timing of disclosure to employees, business partners, and other stakeholders is necessary for advancing integration smoothly. It's vital to disclose information to stakeholders at the right time and consider follow-ups to alleviate concerns after disclosure or integration.

2.3. Maintain a Sincere Approach Throughout M&A Negotiations

In M&A deals, various interactions with the target company are required, such as submitting important documents, conducting due diligence, and negotiating contracts, often facilitated by intermediary firms.

To maintain a positive relationship and achieve smooth integration even after the acquisition, sincerity in dealings is indispensable. It's crucial to ensure a consistent and sincere approach among stakeholders by aligning perceptions.

2.4. Seek Support External Experts

To aim for a good post-acquisition relationship and smooth integration, seeking support from experts from the early stages of M&A proceedings can be beneficial. For instance, M&A intermediary firms can help streamline complex negotiations, mediate difficult conversations, and provide advice.

Merely finalizing the deal is insufficient for both companies to achieve the desired outcomes. Therefore, it's essential to anticipate potential post-acquisition issues, identify expected benefits, and strategize to minimize risks and maximize results.

Considering the introduction of Post-Merger Integration (PMI) consulting to maximize integration effects after M&A implementation is another strategy to be considered jointly with the acquiring company.

3. Conclusion

When a company is acquired, it inevitably affects employees and business partners to some extent. The extent of this impact generally varies depending on the policies and mindset of the acquiring company.

To ensure the success of the transfer through M&A and subsequent integration, it's crucial to anticipate potential impacts beforehand and consider appropriate countermeasures. Seeking support from external experts to smoothly progress from the deal to post-acquisition integration is also essential.