[Robert Winslow]

Does anyone have any experience with acquiring companies wherein the pay structure of the target is materially higher than that of the buyer, and if so, how do you manage this without creating risks of losing people through constructive dismissal suits, unexpected retirements and resignations?

[Kyle Froling]

This will have to be an identified risk during the DD process. If this is something that will be accepted, I would focus on key talent that you would like to retain and offer them a retention agreement and incentives for staying. I have been part of a merger where the organization is very “top heavy” and we would retain their level of pay but would demote their job title and vice versa. You can also adjust profit sharing, bonus structure and other benefits to impact total compensation.

[Robert Winslow]

Thanks, Kyle.

[Tee Kiat Kenneth FOO]

Its quite a tricky question.

Company A could be paying $1.3x amount for this role.
Company B (been acquired) could be paying $x amount for the same role.

Staff at company B obviously would not very pleased with this situation. Therefore the management of the two company would have to decide which key talent(s) to retain.

[Manish]

Differences in pay can cause low employee engagement. A strategy around retention should be a key focus area in the near term to avoid and value destruction. Retention plans can be developed for employees identified as critical to integration.

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