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Advice for Surviving a Buyout?

Posted by Cliff on from the survival-in-the-corporate-workplace dept.

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."

7 of 51 comments (clear)

  1. Happening as we speak... by Anonymous Coward · · Score: 5, Interesting
    You're not going to like my story, I'm afraid.

    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.

    1. Re:Happening as we speak... by BitGeek · · Score: 3, Interesting


      This cautionary tale is probably not that rare or unique-- and it shows just how screwed up management at large companies can be.

      This is why small companies have an advantage- letting geography, or other non-performance criteria decide who stays and who goes undermines the companies ability to function.

      Employees should be loyal as long as the company is loyal... but if they have layoffs one quarter and then layoffs again the next quarter, its clear they don't know what they are doing. (Layoffs once a year are acceptable-- sometimes things happen. But when you do it twice-unless something serious happened, like a major earthquake or 9/11 that affected the economy- that's a sign of bad management. Always lay off enough people to make yourself profitable for the year and do it ONCE. You have two layoffs and you just shot the moral and the loyalty of every employee still at the company.)

      And if you didn't get laid off in the first round, and a good job opportunity came by, take it. Unless you know your position is secure for the long term, the company has put the writing on the wall (eg, if they are the kind of company to likely have new layoffs next quarter).

      Companies aren't and shouldn't be loyal to their employees when times are tough-- though good companies never let times get that tough on them. Employee loyalty is called vesting-- if you aren't vesting, you don't owe them more than 30 days notice.

      That's the breaks. My company laid me off, and did such a class act job of it, that I'd be very happy to go work for them again-- they bought my happiness, essentially. Hell, I *want* to work for them again because I know I like the people there and that they are a class act (I had a choice whether to leave or not, and took the severance).

      --
      Yeah, and you guys panned the ipod too: http://apple.slashdot.org/article.pl?sid=01/10/23/ 1816257
    2. Re:Happening as we speak... by sql*kitten · · Score: 5, Interesting
      Employees should be loyal as long as the company is loyal... but if they have layoffs one quarter and then layoffs again the next quarter, its clear they don't know what they are doing.

      One company I worked for had layoffs in December one year. The following February, the CEO said in a webcast to the whole company that if business didn't pick up there would be more layoffs the following May. Maybe he intended it to scare everyone into working harder, but the result was productivity went through the floor as most employees did one or both of a) sending out resumes, networking and interviewing full time or b) scheming to get laid off and collect a severance package. Everyone helped themselves to office supplies and used the printers, fax machines and phones for job hunting. Many employees openly referred to the office as "job club" (in the UK that is the term for a government-run employment agency) and getting laid off as "hitting the jackpot".

      That round, the second, really broke the back of the company since by happenstance or their own design, most of the "heavy lifters" were gone. Not just the tech elite, but the MBAs too. Next September there was a third, not long after that a fourth, then I stopped bothering to keep track.

      Lessons learnt:
      • There is never only one round. If management tell you there will be only one, they are deluded or lying. Both reasons are just as bad for the employees.
      • The second round is the best time to be let go - you don't have the stigma of first-round deadwood, and the company probably still has the cash to gice a decent package (the folks after round 4 I believe got statutory minimum).
      • If you think it's coming, sit tight, no point in resigning if they want to pay you to leave.
      • Getting laid off is not the black mark on your resume that it once was.
      • Get a reference from HR in writing, while there's still someone around who remembers you and before the company goes bankrupt.
      • See if the company will pay for a lawyer to check the T&Cs of the severance agreement - mine said you many not disclose the amount of the settlement, but didn't include a non-compete nor prohibit me from poaching from the remaining staff.

      It's funny how things go around. The "vibe" at the time was almost the same as the vibe at the IPO - like a party. People who got kept their jobs were the most depressed, the people who got laid off felt they'd been freed!

      Companies aren't and shouldn't be loyal to their employees when times are tough--

      Agreed. After all, employees are always disloyal to employers when a better offer comes along. Loyalty only makes sense when the interests of both counterparties are aligned.
  2. When EMC ate DG by Anonymous Coward · · Score: 2, Interesting

    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.

  3. The death of Truevision by Anonymous Coward · · Score: 3, Interesting

    I was at Truevision when it was assimilated by RasterOps.
    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 .tga image file format.

  4. Historical perspective by Anonymous Coward · · Score: 5, Interesting

    I was an employee of Cobalt Networks when Sun bought them. The #1 piece of advice:

    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 ... make sure they draw the box bigger if you plan to stay at the new company.

  5. My acquisition. by Anonymous Coward · · Score: 1, Interesting

    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"...