Success in acquisitions rests on retaining key people: Mercer survey

Success of multi-billion dollar acquisitions rests heavily on long term retention of key talent, a recent report by global consulting leader Mercer has said.

"For organisations engaged in mergers and acquisitions, retaining critical talent is top of mind, since it often directly impacts overall success of the deal," Mercer's survey 'M&A Retention and Transaction Programs' said.

When companies adopt a retention programme, executives critical to long-term success are eligible for retention incentives in 70 per cent of the programmes, compared to employees for the short-term success of the integration, who are eligible in just 53 per cent of the programmes, it said.

The use of retention incentives is even higher for organisations conducting cross-border transactions with 80 per cent for executives critical to long-term success and 60 per cent of employees, for short-term success of the integration.

According to the findings of the survey, retention incentives, which are designed to keep employees through or after deal closing, are widely accepted means of talent retention while transaction bonuses, which reward employees for the work undertaken during a transaction, are used less frequently.

Transaction bonuses are mostly paid to CEOs, executives and deal team members. Forty-two per cent of executives other than the CEO are most often targeted for a transaction bonus.

According to the survey, organisations in one-third (33 per cent) of deals provide transaction bonuses to deal team members, while slightly fewer (31 per cent) provide them to the CEO.

Mercer's survey analysed information from 42 organisations around the world.

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