[Albert TAN]

I think this is the most challenging part of all M&A transactions. You identify a good company, agree with the owners to buy over. But after that,the employees resigned en-bloc and the customers left for competitors.My experience is to retain the existing management for a period of 3 years to 5 years for a transition period, while learning and cleaning up the troubles or problems left behind by the old management within the first 100 days. If there is any illegal lapses, the buyers can still take legal recourse against the sellers during this period.

[Dorminic Kang]

It is not uncommon to have, as part of the merger terms, a lock-in period for directors and management of the target to continue their employment with the acquirer for a fixed period of time. If they decide to resign, then there may be certain ramifications such as the forfeiture of unvested options, triggering of call/put options or liquidated damages (as between the seller and the acquirer). More importantly, the acquirer should ask itself whether it is retaining the directors and management as a matter of retention of talent for the acquirer, or as an interim measure for transition and handover to new directors and management. If it is the former and not the latter, then the acquirer should not send mixed signals to the target’s directors and management that their time with the company is limited and they will be dispensed with upon completion of integration – this can perhaps be done through remunerating them with stock options rather than a fixed salary and allowing them to spearhead the integration process such that they have a sense of ownership and belonging in the merged entity.

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