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Advice for Surviving a Buyout?
Anonymous for Good Reason asks: "I'm working for a small-medium sized software company that looks like it's going to be bought by a much larger company. We (employees) aren't being told anything yet, but the behavior of our management and some of the information we have been asked to provide all make it pretty clear that somebody is going through due diligence and trying to close the deal. How have other people fared during these kinds of buy-outs? What did you do to make sure you kept your job and weren't RIF'd after the dust settled? How did your stock options, pay, benefits, etc transfer, and was there anything you would have done different to protect yourself? Was the cultural change a problem, or were you welcomed warmly into the fold? I'm mostly interested in stories from people whose companies were bought by the really big players (IBM, MS, Sun, CA, HPaq, etc.) since that's what this will probably be. Since I have never been through a merger of this type, I'm not sure what to expect and with the current economy I would like to increase my chances of staying employed. Any insight the Slashdot crowd has would be interesting."
Michael: I told those fudge-packers that I like Michael Bolton's music. God.
The HP-Compaq-Digital buyout wasn't too traumatic for most of the folks who worked at DEC, but that was a biger company buying a big company. Interaction with "new" management was shielded from many of the people who used to work for DEC.
The part of DEC that got bought by CA was destroyed. Most of the folks didn't make it past the end of the first year, and you could count on one hand the number of people who made it past 2 years. (Out of about 150.) Many speculated that they bought the division of DEC that they did to eliminate competition.
CA's "Culture" was very, very different than it was at DEC, and many people considered it to be employee hostile. The attrition rate was aboout 2% per week.
I lived thru the network business at DEC getting bought by Cabletron. That was another culture clash as well, but not as strident as the CA one.
In this case, many felt that it was a company that bought a good sized business and didn't really know how to get the value out of their new products and employees. It, too, shrunk from something like 1400 people when the deal was announced to 800 by the time the deal was closed, to about 100 by two years latter. Then, that business, with no (new) products, and most of the knowledge of the current products gone out the door, was spun off to another tiny company, which
still exists today, but much smaller, since they layed off most of the remaining engineers.
Bottom line, it depends on who is buying your company and why, as well as the attitudes of the new buyer. If they can deal with absorbing your company, and have an interest in continuing the products, then there is reasonable hope.
If you're being bought out by HP, brush up your resume'.
First, getting bought out is a lot better than getting laid off-- I've ridden a couple companies all the way down, and let me tell you its no fun.
My experience with having our 40 person company bought by a 40,000 person company:
1- Stock options. They paid off well. And the company handled all the unvested options by sending a separate check covering the value of those options (We were bought for cash).
2- When you get bought for stock (which is more likely) suddenly, you're an investor in this other company. You need to go out and do good research on this company to decide whether this company is a good investment. whether your share of the company getting bought is worth $1,000 or $100,000 -- you now have invested that amount in the new companies stock. If this is a bad investment, you need to start moving your money out! (And if this is a big percentage of your net worth, diversifying may be a good idea.)
If you've spent a couple years investing and know how to do this analysis (and your "Analysis involves actually reading their financial reports, and determining the right price, not just momentum) then you already know what to do. If not, the only short cut is to go to quicken.com and get their one-click scorecard for the company buying you. Use the NAIC Rules or the Buffett method. If the company is not a "buy" under these criteria, and the reason is more than one thing (or the reasons are fundamental ones- and the company hasn't been a buy for awhile) then you probably should consider selling. I'm not giving you advice- I don't know squat about the company thats buying you-- but you are essentially selling your stock in the old company and buying stock in the new company at the price of the deal! IF that price is not a good one, then its a bad investment! Even if it seems like "free money".
3- You're probably going to get better benefits. big companies tend to have these worked out, with lots of little benefits, etc. The biggest benefit you risk loosing is vacation time, as bigger companies tend to be less smart about this than small companies. Ask for adjustment to your salary to cover the weeks you lose if you lose any.
4- Bigger companies do weird things. They will likely put lots of silly contracts in front of you. In my experience, they asked us to sign something that was illegal or unenforceable in our state. I balked and the HR drone didn't know what to do-- but the HR rep was cool about it, and impressed when I showed him the law in question. Generally, I've found you don't have to sign all the silly paperwork. FRankly, in reality, all the paperwork you already signed you're still bound by, and they still have an IP contract and all that, since they bought the company and your responsibility transferred with ownership-- so if they ask you to sign new noncompetes, and stuff like that, take that for the negotiation opening it is and make sure you don't get screwed.
4- Layoffs. I was laid off about a year after the company bought us. They laid half our staff off cause they realized they probably shouldn't have bought us. The severance package was good, and that was a pleasant surprise. When a startup goes under the severance is usually two weeks, this was much better. How to avoid being let go? Be a good employee. Usually they don't reorg the whole thing... but many people start bucking for positions inside the larger company. If you smell layoffs, get on the larger companies intranet and find other position there to apply for. You have an advantage by already being an employee.
5- You have warning, if you haven't already saved 6 months of living expenses, start putting away %25 of your gross income now. IT almost always takes a couple months for them to start axing people-- if that's what they're going to do-- and so the next six months will allow you to save a couple months salary.
You're right to be wary-- be conservative with money, seriously look into the new companies stock to see if its a good investment, and keep your bosses happy-- they'll probably be your new bosses and if layoffs come, they'll have to decide who gets to go.
Good luck!
Yeah, and you guys panned the ipod too: http://apple.slashdot.org/article.pl?sid=01/10/23
Good luck! Regards,
-too frequent chute user.
"I figure you're here 'cause you need some whacko who's willing to stick his finger in the fan. So who are we helping?
I worked for a small privately owned ISP which was bought out by a larger local ISP. There wasn't any transfering of shares to worry about, but we received stock options at the new company and our pay remained the same. After 60 days we all had to option of staying or going and most of us stayed. A year later a nation-wide telecommunications startup bought us and again, pay remained the same although we got screwed on stock options. This telecommunications company let us sit and waste away while they were trying to figure out why they bought an ISP concidering they had no clue how to run one and 8 months later the layoffs started. The layoffs never stopped. They continued until the day that the doors on our office were closed and the telecommunications company pulled out of the state completely. I got out before I was laid off as did my girlfriend, but I had friends who are _still_ unemployed and that layoff was almost 2 years ago.
I sincerely hope your experence is better.
blah blah blah....
drightler@technicalogic.com
Many times employees of the smaller company decide that working for a big company and dealing with the bueracratic nonsense sucks and jet. Particulary when the buying company is a big, old company like (the former) AT&T, IBM or the like.
There are plenty of examples of this out there.
Conformity is the jailer of freedom and enemy of growth. -JFK
One question you might want to find the answer to: Why are you being bought? If it is so that the larger company can aquire a technology of yours, then your future does not look so bright as if you are being bought for your person-power.
J'aime mieux les méchants que les imbéciles, parce qu'ils se reposent. -- Alexandre Dumas
I've been working for a large financial company for the past 5 years. We were just bought out by the biggest bank in Europe. I was chief geek for our company's web apps & architecture team. What happened is that at first, there was a merger where people scrambled and said "Ok, who can merge X and Y fastest?" You'd think that in that situation the bigger, newer player would always choose their own technology, but that didnt' happen. On the contrary, I thought that we dazzled them with exactly how prepared we were for such things. For the merger, several of the bigger company's sites were killed, and we got to create a couple of new ones. In short, we thought we were doing pretty good -- we offered a platform that the new company just didn't have. I was one of the chief cheerleaders trying to shoot down hallway rumors by pointing out how much we offered that the new company just didn't have.
Then the geography rumors hit. The new company is based in New York, we're not. So regularly we would hear that they're closing us. yet, all the officers would tell us "There's no mandate to close this office." On the contrary, the new company even had some 9/11 issues to deal with, and we were under the opinion that they *liked* the idea of not being centralized in New York like they used to be.
Then the IT pruning began, and this is what killed us. It seemed like every quarter we'd be given another percentage number to hit. Layoff 20%. Now another 30%. You agonize over what 3 people to get rid of in the first round, then have to find another 4 people 2 months later. Sucks. You start saying "We can't *do* anything now that we're this small", and you start to realize the end is near. You realize that you're getting hit far greater than New York, and despite the fact that there "is no mandate", the simple truth is that all the bigtime execs are in New York and like to keep their people close.
Right around now you realize that the world is not what it was 3 years ago, and that sucks. Engineers get pissed and say "Screw it, I'm looking for a new job." Management counters with, "Have a nice time. You're not going anywhere." Chaos ensues when people who anticipated a layoff actually *do* find jobs and quit, thus royally messing up the headcount. We had this happen - had to get rid of some people, told them, and then another guy said "Well, I quit" so we had to un-layoff somebody.
About 2 months ago the final word came as the new owners swooped in, said "All developers on this team except for you two guys, you're gone. You two are transitional until next quarter. Operations crew can stay and keep the sites running." And that, as they say, is that.
First reaction of all the people around me was, "Oh, come on, you've done really good work for them for 5 years, surely if they're getting rid of your department, they can find a place for you somewhere else." Rebuttal: "Anybody at the original company who might have been able to do that is already gone. I'm lucky to have survived as long as I did. The new company never saw us as anything but a number on a budget. Nothing we could possibly have done would have changed that."
Sucks, but that's the story of what happened to us. The painful part was watching it happen with our hands tied and wondering if we could have changed it. I don't think we could have, which is what keeps me from getting too depressed. I can still tell myself that we did some good work, and not beat myself up over mistakes we might have made that cost us our jobs.
Good luck to you.
I was on the EMC side of the fence, but for the most part it was benevolent take over. DG employees were offered a vary generous bonus for staying on...although after the bonus period many cashed out...and once the internet bubble burst (which it turns out was fueling alot of EMC's growth) when it came to cutting dead weight many former DG people who were in my department ended up on the chopping block. These were people who never made the adjustment however to EMC religion and were still trying to do things the DG way. There are still many DG people here and many of them highly placed in the company. I guess all and all its been a good thing since DG probably wouldn't exist anymore had EMC not grabbed them up, and EMC probably wouldn't have survived the Bubble burst without DG's Clariion line.
I was at Truevision when it was assimilated by RasterOps. .tga image file format.
When tv was small, it was a cool company, profit sharing,
everyone pulling together, driven to get great products out
the door. Then things changed. "Management" viewed the
company's success not as a group effort but due to their
management skills. Profit sharing dried up. People started
getting fired, mainly for trying to keep a stake in the company
the started. The company's product focus shifted from video
to being the company itself. This lasted about a year. One
day, they got everyone together and told us what great news
they had. We'll all have to make some sacrifices but it'll be great.
In less than two years, it was all but dead. Exec's playing musical
chairs, grabbing for money. The engineers and support staff that
actually build the company were viewed as disposable equipment.
Sucks. It was cool when it started. Ego and greed did it in. About
all that's left is the legacy of the
Run. Run far away. Nothing good will come of it. Been through 5, never a good thing.
Yes, I am an agent of Satan, but my duties are largely ceremonial.
The big guys are working deals so they'll be rich, and you won't even figure into their plans. They may throw a bone at you to keep you from leaving thru the transition, but they do not have your interests in mind. BC
Read This - Who Moved My Cheese? An Amazing Way to Deal with Change in Your Work and in Your Life by Spencer Johnson, Kenneth H. Blanchard
I quit and got another job before any of the buy outs were finalized and have never regretted it.
Things might work out - things will be OK - things will be better - BULL SHIT. Each time I would have HATED it if I would have stayed. You work for a company because A: you want to - B: you have to. If your in the B section - then it might be OK for you stick around and see what happens. But if you choose to work at the company that your at - then you won't like the buy out one bit.
The buy out process is painful and stupid and frustrating and several other things - its not worth the bull shit to me to see if I will still have a job at the end of the day. My advice is look elsewhere before everyone else is looking.
Duke
FreeBSD: Nothing runs like a daemon with a pitch fork.
Big company buys small company -- most likely for small company's tech, or customers, or what have you.
Big company institutes its policies on small company, perhaps cuts some of small company's redundant staff -- small company's HR department, for example, goes bye-bye.
Small company is now dependant on big company for resources, like HR.
Attrition begins on small company: if big company is doing layoffs, small company has to do layoffs with it, but small company doesn't get many (if any) new hires.
Small company, which now has less employees, can do less, resulting in big company treating it like a liability and stepping up the attrition rate.
Small company eventually folds, with any remaining employees fired or relocated to wherever big company is.
Long story short, big company buys small company because small company has something it needs. Once it has it, it doesn't need small company beyond a short transition period, and it's not going to keep small company around.
Yes, I'm cynical.
You'll see layoffs in HR, Finance, and Accounting first - these departments are nearly identical across all companies. If you mainly do work for one of these departments, get transfered. Then come the easily digestible IT departments: Networking, Desktop support, Help Desk, etc. Day-to-day Ops Application support is usually safe for a while. Developers, DBAs, and SAs it depends. I've seen a couple of companies layoff all the SAs & DBAs and add those duties to the Dev staff.
(for the humor-impaired, this is the plot to the movie "Office Space", a geek standard).
Seriously, good luck! A few good things can happen: you're kept and enjoy your job. you're laid off and find a better job. You hate the new company and find a better job.
Tiller's Rule: Never use a word in written form that you've only heard and never read. You will end up looking foolish.
Just a word, it can take years before the effects are known. I used to work for a company that wa sbought out. 7 years latter the parent finially admited that the salemen would never sell the (good) products that the smaller company had, and got rid of everyone. Of course in 7 years most of the work force in the smaller company had changed just because few people stay on that long, so the people affected are not the people who were there when it happened. All along they funded some good engineering.
I was an employee of Cobalt Networks when Sun bought them. The #1 piece of advice:
... make sure they draw the box bigger if you plan to stay at the new company.
Make sure the company buying really knows what your company does, has realistic expectations of what they want you to do for them, and is not over-valued in the market. If none of these happen, hope to the Gods they vest your options when the merger hits (Sun didn't) and that they have a good severance plan (Sun did).
In the case of Sun/Cobalt:
* Sun didn't understand the Linux market and therefore didn't realize that Cobalt appliances were -not- going to carry them into the Linux server space.
* Sun didn't understand that to penetrate the linux server space (beyond appliances) they would need to add people to the Cobalt force if they also expected the server appliances to continue. Worse, Sun didn't allow the group to replace members who left.
* Sun didn't understand the sales model behind the Cobalt appliances and just assumed that sales and support could be folded into the same organizations as everything else. This killed the Cobalt sales model and forced many distributors to go away. I won't even talk about support beyond that fact that after Sun it was even worse and Cobalt struggled there to begin with.
* Sun / Cobalt chose not to vest employee options at the time of purchase, supposedly to provide incentive for employees to stay on with the company. In truth, it did have that effect (and we also got a 6-month retention bonus) but in the end it meant no one ever saw any money from stock options unless they got in when Cobalt was valued at less than $3/share.
* Sun was very overvalued during the tech bubble. I don't know of anyone who joined Cobalt after November, 1999 (when they went public) who made any money off of stock options except for the 2 or 3 people at the very top. If they had vested employees at the time of merger this would have been different.
* When Sun saw the bubble collapsing they decided to slowly kill off Cobalt by attrition rather than invest in helping create new appliances that would satisfy new markets.
* When the RIFs/layoffs finally hit about a year after the merger, more than 50% of the former Cobalt field employees were gone (average at Sun was less than 20%) and about 30-40% of the employees at the home office were hit.
* A year later, when further RIFs/layoffs hit another year later, most of the rest of us were gone. Damage estimates so far make it appear that they laid off nearly 100% of the field folks and about 30-40% of the home office employees. About the only people left from Cobalt are the folks key to providing engineering and support to the existing products.
* The only decent point is Sun had a decent severance package. Most people got between 2 and 6 months of pay depending on how long they had been with Sun.
* Based on what was being said before the last RIF, it would appear that the appliances are on their last leg. Most of the folks that came from Cobalt now work on things like the LX50 (GP server) and Sun Linux, though it sounded like Sun Linux was due for a major shift out of the mainstream, too, despite all the promises that were made for that.
Overall, I think Sun was a good company to work for, the problem was that the Cobalt folks were creating things that were outside the box. That's a bad place to be
If HP is buying your company, make sure your resume is polished and ready to be deployed.
Start looking for a new job. Immediately. Our company was bought out and I ignored the rumours ( that's what my managers said to do, who was I to ignore them). It didn't ake 3 months, but 17 months and I was part of a 20% lay off. If I had looked when teh market was better I'd have a job now. As it is, I've had a few temp jobs but nothing very good. Start looking.
Get every promise in writing.
Do it nicely, saying that you of course trust the person you're talking to, but it would ease your mind greatly to have everything in writing, blah, blah, blah. But get it in writing.
I know of one recent acquisition where it was promised that everybody who wasn't immediately layed off would get signing bonuses. The execs of the acquired company had negotiated separate contracts that mentioned the signing bonuses. But the regular workers signed a contract that said nothing about that. And funny, a month later, the new parent company cancelled the bonuses.
Remember that a takeover can be a time of hope and opportunity. They want your company for a reason. Maybe its to snuff it out, but thats actually fairly rare. If they really want the technology then the technology people can expect job security, with the opportunity for promotion and pay rises. Technology companies real value is generally in the heads of the people who are making it. Without that all the IPR in the world is so much scrap paper. Your purchaser almost certainly knows this.
Paul.
You are lost in a twisty maze of little standards, all different.
Hate to say it man, but by this stage in the game there is little if anything you can do to effect your chances of not being laid off. The prospective buyer already knows approximately who is staying and who is going because they are already crunching the numbers on how to make such a deal work.
If you're a hard worker, skillful, and not making a hojillion dollars (unless you are really doing something almost no one else could do) you'll probably survive most buyouts. Take a look around your work area at people doing similar things and ask yourself, objectively "If I was an employer and could keep only one of the two, would it be him or me?".
A buyout WILL involve layoffs. Its sad to say, but if your current company was doing so well to begin with, they wouldn't be thinking of selling.
Bollocks. That pamphlet (80 pages is not a book) is all about "Quitcherbitchin and get back to work". It claims to be about accpeting change, but it primarily is about a way for management to subvert employee resistence to changes that harm them.
We (40 person company in a metro area) were bought by an 800 person company in a suburb (35 miles away).
All the employees made a bunch of noise about the new, hellish commute (15 minute walk vs 45 minute drive!).
Eventually we got a good deal out of them:
6K salary increase.
work from home as your manager would allow.
commuting costs paid for 6 months.
About half of our group of 40 have been laid off since then (14 months since we've been acquired).
Rules I'd follow:
Follow the lead of the most valuable employees. If they're on board, you be on board. If they're going to fight, back them up as much as you can, but realize you might end up being in the most valuable group if they decide they're not coming.
Start looking right away. It can't hurt.
Make your name known. Through efficient use of discussion forums and mailing lists, I made it clear I knew about the product they had just acquired. "If you have a deep technical question, you ask me or you get a wrong answer." If you can't do that, be helpful, be known and be flexible.
Do NOT piss your management off.
We had this one guy who yelled at the President at the christmas party, and then went out of his way to break a few other company rules. He was out in the first round of layoffs (there were many less productive employees they could have gotten rid of instead).
Have compasion for your manager. My manager is someone from the old company. I no longer go out of my way to poke fun at him in meetings, he's got it hard enough. He's now one of the little people, not one of the people "in the know"...
purchase of Rational Software by IBM?? I'm sure almost all buyouts (or purchases, whatever) sound the same... but for some reason an uncanny fealing of recognizance swept over me as I read your post since I'm going through the same thing. Like you, I also haven't been through a buy-out before. Rational is not a competitor with IBM though, and the deal is for about 2.2Bil (all public info). I can see how HR, sales, IT, etc, would get screwed, but I'm at least a little optimistic since I work 'closer' to the main product (not an actual developer of the product though). The team I work on is already horribly understaffed and we do support a good deal of our department with essentials, so I don't see any logic in snuffing us out. Too bad there is one ultra-performer in my group :/ otherwise I would probably be on par with everyone else. I also happen to just be moving into my first place now and rent is expensiiiive... hope I don't get pounded in the ass ~ good luck.
... they bought us for our software, and we're still developing it in the same places two years later and have gained people.
Get your resume in order, call your contacts, network, take the secretary who Knows All out to lunch and find out what's happening, if possible. But in all circumstances, be ready to move when the situation becomes a difficult one, as the odds are probably against you and your co-workers in the current business environment.
Regards,
-ocelot wreak.
"I figure you're here 'cause you need some whacko who's willing to stick his finger in the fan. So who are we helping?
and rice
mountain dew is much better moron!!