Employee retention agreement before merger
usinfo | 2014-06-06 17:11

For the acquisition side, an important consideration is how the entire acquisition process, and after the acquisition process will retain key employees. Enterprise value of many companies, mostly from the employees themselves. These companies often heard it said, "the company's assets walk out the door every night on their own." Although almost all companies are like this, but the software development company, R & D department is very important to the company, as well as business customers rely on personal relationships with companies in particular.

Remain issues that employees should be addressed at an early stage of the acquisition process should be in time for the transaction to be completed prior to public employees. The best potential target companies before the acquirer contact with such a policy worked out as soon as possible, because if suddenly come up employee retention plan, often exacerbated by the sale or purchase of an impending speculation. Taking into account the non-publicly traded staff discovered and almost omnipotent (regardless how hard the management of confidentiality), then even more so.

Most employee retention program approach is to be able to remain in office until a certain time or a specific trigger event occurs employees to provide positive incentives. Such incentives usually take the form of cash or stock. The typical employee retention system is usually issued 6 or 12 month's salary at the time of his resignation, and provide a period of three years cashing in shares or stock options.

You can also have a lot of changes in this basic institutional. By providing generous severance pay guarantee, so that employees do not have to be worried that the new owner will be in business after the completion of the transaction to be immediately dismissed, thus reducing the likelihood of employees actively looking for a new employer. Three-honored system can increase the opportunity cost of outgoing employees, thus opening new employer will have better conditions to attract employees.

Too rich, especially in office expenses to only a small number of employees and senior executives often referred to as "golden parachutes." This is a very negative word, reflecting the relevant staff selfishness. In the end what constitutes golden parachutes, each person has a different view. In general, however, remain as long as the program focuses on senior management, and out of the conditions much better than the lower-level program retain key employees, it can be considered a golden parachute. Accordance with the "Internal Revenue Code" golden parachute retain fees in line with the conditions applicable to the federal tariff.

Negative incentives almost never been used before, and in many cases is illegal. For example, the United States, leaving the company and its employees shall not threatened or destroyed his professional reputation - in the U.S., the company under another employer's requirements for employees to make negative comments are usually illegal. And many other countries, the United States, employees do not work record or "file" available for potential employers to check.

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