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The Success Of Multi-Billion Dollar Acquisitions Rests Heavily On Keeping Key Talent For The Long-Term, Mercer Survey Finds

For organizations engaged in mergers and acquisitions, retaining critical talent is top of mind since it often directly impacts the overall success of the deal. According to Mercer’s Survey of M&A Retention and Transaction Programs, when companies adopt a retention program, executives critical to long-term success are eligible for retention incentives in 70% of the programs, compared to employees for the short-term success of the integration who are eligible in just 53% of the programs.

Moreover, the use of retention incentives is even higher for organizations conducting cross-border transactions – 80% for executives critical to long-term success and 60% for employees for the short-term success of the integration.

Mercer’s survey examined the extent to which two main tools for retaining critical talent -- retention incentives and transaction bonuses – are used. According to the findings, 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.

“Organizations must first review their acquisition strategy to determine if a retention incentive plan is needed to protect against critical employee flight risk. If so, key design considerations include which employees should participate, how much they should be awarded, payout timing and structure, performance conditions, and finally, overall plan cost,” said Chuck Moritt, Senior Partner in Mercer’s M&A consulting business.

Mercer’s Survey of M&A Retention and Transaction Programs analyzed information from 42 organizations around the world actively engaged in mergers and acquisitions to better understand the tools used to retain critical talent. The survey reflects detailed information on the retention and transaction programs implemented in over 70 deals completed by these organizations in the past three years.

Retention Programs

Retention programs focus on retaining executive and senior management critical to the integration process. According to survey findings, almost two-thirds (62%) of deals completed by participating organizations over the past three years used retention programs. Typically organizations determine whether a retention program is necessary early in the due diligence process, then determine eligibility as the close of the deal approaches.

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