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Business Acquisitions and the Effects on Employees

Business Acquisitions & Employee Management

Newton's Third Law of Motion in physics says that for every action there is an equal and opposite reaction. One may be asking, what does this have to do with business acquisition and the effects and current management and the rest of the employees? The answer to that would be everything. Like most things in life, this statement can be used in a different context than the one it was originally intended, but for this purpose, it will be related to the context of business.

In order to explain this concept, let us use an example of two businesses, Business A and Business B. Business A is doing well, it has a high margin of equity and its quarterly profits are through the roof, but it is small and looking to expand. Business B is a bigger company than Business A, but it has fallen on tough times. Its value is down, its production materials are obsolete and virtually non-existent. The only true value it has left are its employees, who are unaware of the company's desperate position. Business B enters into an agreement with Business A to sell their business to them as long as Business A is willing to take along the most valuable asset of Business B, their employees. Business A agrees to this, they sign the paperwork, and Business B, along with its employees, are now a part of Business A. This is part one of Newton's Third Law, or the action to which there will be a reaction.

As anyone in business can tell you, when it comes to business acquisitions, signing paperwork for the transfer of property and the dissolution of stocks and other remaining equity is easy. These are inanimate objects that are subject to the will of those who manipulate them. But when employees are involved, things get a bit trickier. These are human beings with feelings, thoughts, and wills of their own. They may have been unaware of deals made or the transfer of their work contracts to new owners. Understandably, this will be a very uncertain and stressful time for them. The way they handle this will be in the second part of Newton's Third Law, or the reaction. Businesses want to make sure this reaction is a positive one that does not negatively impact their company of which these new employees are now a part. To ensure this, there is a two step process known as the two C's.

Control and Counsel

A company should be proactive about this change. Before one even considered making this proposal, they should have examined their equity to see if they were in a position to handle a transfer of employees along with the purchase of the physical business. If they did not, the situation could become chaotic; but if they did, they are one step ahead of the game.

Businesses should already have the new employment plan laid out. This plan should involve salary, health plans for those full time, a summary of their new job position, expectations, job security and anything else a new, and very uncertain employee would want to know about.

And then, the management team should then meet individually with all of the new employees to address their fears and concerns within this process. People react positively when those with authority begin addressing issues head on instead of giving vague statements and dodging questions. There is power in authority, so someone at the very top, preferably the CEO, should show their face so people can get to know them and personally address them. If possible, after all of the meetings have been completed, there should be a mass reinforcement of this information by the CEO so that these new employees know that these orders came from the very top.

Overall, the point is to prevent high employee turnover rates and to keep the now expanded business in question as stable as possible during the restructuring period. When employees are treated like people, instead of like a means to an end, or actual human capital, they will respond and give businesses the positive reaction they want.