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Merger (or Acquisition) Recommendations?
pauly asks: "We are a small (5 man) specialized software company which is merging with a larger (200+ employee) company. Basically they are buying us to
add a whole new product line and have us be their development skunkworks. What recommendations would Slashdot readers have before, during, or shortly after the acquisition? This post is not a solicitation of legal advice: we have a very nice contract drawn up which is agreeable to both parties and which we will be signing shortly. We are looking for practical precautions or recommendations.
If you have gone through the same type of deal, what would you do the same, or differently?"
we (the quints) do receive a cut of the revenue we bring in from new installations of our software
Don't count on this unless there are specified minimums. I've seen a case that sounds exactly like what you are describing, where after a week or so of happy-happy, the new hires started getting assigned to help another team that was developing a replacement product, were told to add a data export feature to their product, etc. They wound up doing 90% of the work to migrate their old customers to the new owner's product (including helping the sales team when it came to that), and then they were all (almost all? --this was several years ago) let go. From the day of purchace, there was never a single new installation of their product.
Of course, I have seen it work out well (in one case the purchaser was a hardware vendor and the company they bought wound up being a very technical vertical market sales team, getting paid their old base pay, plus (in some cases) commissions, plus the bonus based on their software); it can work out well; but I would not count on it.
-- MarkusQ
P.S. Be especially suspicious if the cut you get when your software sells seems too good to be true.
I think that was the number we were given when our smallish (1200 people) company was bought out by a big (~7000 people) company. They said they were commitied to making it work, and for the first year it looked that way. Then things went downhill. Slowly management got worse as people left or got transfered. Eventially good talent was brought in, but by then it was too late, the new CEO 6 years latter didn't care about us, and 7 years latter only about 10 people have a job from the old company (some hired after the marger)
To be fair, the new CEO made the right decision, the merger failed, and could not be rescued. The problem was the salespeople had no interest in selling our products, so we had plenty of great products that nobody was buying. The merger failed because one of the benifits (the big company's salespeople had better contacts in industry, and there were mote of them) didn't work out.
In other words, even if everything seems brought now, keep yoru resume up to date, the things that make a merger fail are the same as any engeriing product: management or sales. I've seen many cases of a baddly engineered product doing well, while the compitition that is better built fails in the market.
I worked for a company that was acquired by IBM.
Before the buy-out, I worked, not in an office, because there was no door, but it was in a dead-end, quite cul-de-sac of a quirky office suite.
Post-IBM, we got moved to a building roughly approximating an airplane hangar, scores of people in cubes, no privacy, no way to concentrate.
Everytime a salesman made a particular type of sale (I guess it was a high-end sale) they would ding a bell over a loudspeaker, and everyone would pop up like prarie gophers, trying to figure out what was going on. This would happen several times a week.
I guess what was going on is that big companies are short on creative talent - they don't understand it, and they don't respect anything except new sales BS. To them, we were just a bunch of trolls, mental factory-workers.
Plus, they had us working with a totally different, very bad, set of tools.
I worked for a small internet startup, around 40 employees or so. We were purchased by a large media corporation, which seemed cool at the time, we all got nice stock options, several people were made millionaires, and they said nothing would change because their main office was in another part of the country and they would basically leave us alone.
Shortly after, we had an HR department run by Nazis. Managers were hired that fit more into the "corporate" world. The fun plug was pulled on just about everything. Free soda and snacks went away, happy hour paid for by the company went away. People were forced to adhere to strict hours, even if they were stuck at work until 4am the night before. Our benefits got worse. It basically turned into the movie Office Space. Very sad, it used to be a great place to work.
All of the really smart people got fed up and left. If they were replaced, they got replaced by stupid people for less money. The corporate mantra fucked that place up. The little things made people happy and productive and it was all yanked. Instead of wanting to come into work in the morning and have the pleasure of solving complex problem with a group of very smart people, everyone started to dread coming into work, the smart people left, and then it just went downhill. The company is still around, but the people still there all tell me that are looking to leave.
If they send a permanent HR person to your office and instigate "form hell" on you, run away as fast as you can. It's HR that ultimately screwed that place up.