A new strategy is emerging for companies that acquire others: retain top talent of the acquired firm to help stave off a post-merger failure, The Wall Street Journal reports.
High-profile exits after mergers and acquisitions are common. Jeffrey Krug, PhD, dean of the business school at Bloomsburg University of Pennsylvania, told WSJ acquired firms lose a third of their executives on average within the first two years of an acquisition. Such departures can doom an acquisition, WSJ reports, and companies are starting to take notice. Now more businesses are trying to integrate executive teams.
For example, after LinkedIn's $26.2 billion takeover by Microsoft, LinkedIn's CEO Jeff Weiner retained the ability to run his company as an independent unit and will make at least $43 million over the next four years if he hits his goals. One-fifth of Yahoo's executives are former leaders of startups it has acquired since 2012, according to the report.
The trend is visible in healthcare too. Take Hackensack Meridian Health for example. The health system, newly formed in June, is the result of the merger of Hackensack (N.J.) University Health Network and Neptune, N.J.-based Meridian Health. The two systems ultimately decided their strengths complemented each other, and so did their CEOs. Robert Garrett, president and CEO of HUHN, and John Lloyd, president and CEO of Meridian Health, chose to lead the merged system as co-CEOs for the first 2.5 years until Mr. Lloyd retires.
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