"You'd better not talk!' said Five. `I heard the Queen say only yesterday you deserved to be beheaded!'

`What for?' said the one who had spoken first. 

`That's none of your business, Two!' said Seven...

The Queen's argument was, that if something wasn't done about it in less than no time she'd have everybody executed, all round. (It was this last remark that had made the whole party look so grave and anxious.)"

 

- The Queen's Croquet-Ground in Alice's Adventures in Wonderland, Lewis Carroll, 1865

 

When a company is acquired it has immediate and long lasting effects on those employees acquired.  Moreover, the integration of cultures and practices creates paroxysms of turbulence as the acquiring company seeks assimilation and cost synergies.  As a middle-manager who was acquired by Procter & Gamble in its acquisition of Richardson-Vicks in 1985 and was spectator to the assimilation of Norwich-Eaton, Noxema, and Searle OTC by P&G let me apprise recently acquired employees of what to expect.

 

Generally the first pronouncement made by management is to communicate to the acquired employees how similar the cultures are, how their independence will be maintained, and how they will never shut down the site at which they are working.  Mostly this reflects the uncertainty and prematurity of the acquiring company's knowledge of the situation.  Little or no credibility should be attributed to these early pronouncements.  They are only given to maintain order and prevent needless disruption.

The fate of top managers in the company is very different than the rank and file employee.  Whether the acquisition is for cash or stock these managers will have already negotiated enormously lucrative deals.  Yet even when retention bonuses and titles are granted to them there remains an invisible disincentive to remain at the company particularly when the retention benefits are dwarfed by their capital gains and newly created wealth.  Thus, the credibility of "old management" is immediately suspect.

Culture is THE most relevant variable in any acquisition.  No two cultures are the same; the more divergent they are the more certain your fate.  In the case of Chattem/Sanofi the divergence is high; Richardson-Vicks/P&G intermediate; and Alcon/Novartis closer to each other.  Usually the acquiring company is large and global; if it acquires small "bolt-on" companies that are private, family run, entrepreneurial, or start-up the gap is large and their assimilation assured --- the only question is how soon and how aggressively.

Not all employees choose to leave over time dependent on their function and marketability.  There are always some employees that immediately head for the door.  First come the sales force, followed by marketing, finance, and lastly R&D.  These moves are driven more by culture clash, control, and perceived advancement.  Titles and equivalent responsibility at larger companies tend to be shifted down and up respectively.  The "home team", the acquirer,  will always hold home court advantage versus the "away team" in advancement. power, and hierarchy.

Acquired employees will suddenly find themselves shuttling to the hometown of the acquirer for frequent team meetings; dotted line relationships will sprout while home team ad agencies and consultants are brought into play.  Employees will suddenly find themselves reporting into functional managers or project teams in the new company in addition to local "old management".  Reporting relationships into the new company are often into managers a rank or two lower than expected.  Title and rank disparities will be leveled over time in favor of the home team.  Ambivalence will grow.  The first headquarters employee sent on temporary or permanent assignment to the acquired company will mark the start of the end.  The speed of integration can be judged on how quickly acquiring employees are inserted.  A more proximate measure is who controls department and corporate budgets and how quickly.

Companies that are acquired as free-standing subsidiaries are never completely left to their own fate -- it's simply too important and improbable to do so.  The first 1-3 years after any acquisition often leaves the acquired employees in state of limbo.  I have often termed this the "Vichy" period [http://en.wikipedia.org/wiki/Vichy_France].  During this period acquired employees are uncertain from whom to take their orders and where their loyalty lies.   In the case of Richardson-Vicks, a free standing Connecticut subsidiary of P&G for 7-years, uncertainty was rampant before the entire organization was finally "Procterized".   Acquired employees eventually either moved to Cincinnati or were packaged out.  Amazingly up until a year before the fateful relocation employees were repeatedly told the acquirer would never leave Connecticut.  Another version of integration, often chosen by acquirers, as demonstrated at Norwich-Eaton and Gillette, is to leave the manufacturing facility in place as a "bone" to local government while centralizing the remainder of the operation at the home office location.  Thus, the acquired company eventually becomes simply a manufacturing site subject to future plant consolidations.  These assimilation scenarios are most often complete in five years, if not earlier.

Be assured that the financial wizards at the acquirer will be soon be conducting comparative cost analysis of maintaining operations at the acquired facility vs. at headquarters.  If personnel costs, land, utilities and taxes are more favorable at the new location, or if intangible value and know-how are truly special (rare) these may encourage decentralization.  On the other hand companies with strong cultures of centralization, or control, like P&G, may desire to shut down out-lying facilities.  In the case of Richardson-Vicks few original "old company" people remained after 5 years and those that remained had adapted to the new culture and language.  However, these expatriates and transferees became fluent in the new culture and language but were recognized as naturalized citizens who spoke with an accent.

What an acquired employee needs to face is that the minute management sells the company it is breaking its trust with you.   Your world has already changed and denial is not an option. Acquired employees need to immediately take responsibility for their careers by making proactive decisions.  It is simply too easy to fall asleep or get lulled into a false sense of security.  The culture will change.  Question all pronouncements, take control of your life, trust yourself.  The "magic" of the old company will vanish.

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[Dr. Riker is a former Associate Director, Personal Healthcare at Richardson-Vicks & Procter & Gamble including the 1985 acquisition of RVI, and Chattem's last Vice President of R&D & Chief Scientific Officer prior to the Sanofi buyout]