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Provide New Top Management

The business these people sell is their “child.”

Within a year or so, the acquiring company must be able to provide top management for the company it acquires. The buyer has to be prepared to lose the top incumbents in companies that are bought. Top people are used to being bosses; they don’t want to be “division managers.” If they were owners or part-owners, the merger has made them so wealthy they don’t have to stay if they don’t enjoy it. And if they are professional managers, without an ownership stake, they usually find another job easily enough. Then to recruit new top management is a gamble that rarely comes off.

This applies particularly to a CEO who originally built the company that he or she sold. Very often this CEO has actually initiated the acquisition. He or she typically expects the acquirer to make the changes that he or she has been reluctant to make—for instance, get rid of an old employee who is a close friend and has served the company faithfully as it grew but has been long outgrown by the job. But still, the business these people sell is their “child.” And the moment it is owned by someone else, they become protective and see their job as defending the “child” against one of those unfeeling “foreigners” who now own it.

ACTION POINT: Investigate a recent acquisition by your company or another company. What happened to the top management of the acquired company?

The Frontiers of Management
The Successful Acquisition (Corpedia Online Program)

* Source: The Daily Drucker by Peter F. Drucker

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