What happens to employees after an acquisition?

A merger or acquisition is often part of a private company’s lifecycle. For companies backed by venture capitalists, a deal with a big price tag is often one of the best possible outcomes, resulting in payouts for investors, executives and rank-and-file employees.

But how exactly are employees compensated when their companies are acquired, and what happens to their jobs? J.Thelander Consulting, a compensation data and consulting company, recently released its 2018 private company M&A report, which sheds lights on those questions and others related to M&A. Participants in the survey include private companies and executives who have been through a merger or acquisition, on either side of the transaction.

One data point of note, for instance, is that 72% of executives and 42% of employees below VP level participate in the proceeds of an earnout in accordance with their stock ownership in the company.

J.Thelander Consulting’s latest survey is on year-end merit increases, option pools and bonuses at private companies. The results of the survey will feature information on salary increases for executives and other employees and details about sign-on & retention bonuses, among other insights. Participants in the survey will gain access to a free overview of the results and a discount on the full private company subscription plan on the Thelander platform, which contains information like what’s included in charts below, some possible outcomes for leaders and employees that have been through an acquisition, from the M&A report. Click here to participate in the year-end survey.

What retention incentives were used during the acquisition & integration process?

What approach did you use when selecting the leaders and key employees to stay on?

Of the companies that participated in the M&A survey, a plurality—28%—have received less than $5 million in equity funding, while 26% have brought in somewhere between $5 million and $14 million. Roughly 7% of participants are from companies that have raised more than $200 million, with the remainder falling somewhere in between.