What happens when a company is acquired by another company and the key intellectual assets just don't seem to mesh with the combined enterprise? What do I mean by intellectual assets you might ask? They are the least accounted for and most precious asset of the company. They are the people who know how the company really works. They are the people that were the reason that the company was worth buying in the first place. You will not find them on the balance sheet. There will be no mention of them on the asset inventory. No dollar value is associated with them directly even though all the dollar value of the organization is a result of the actions they have taken and the decisions they have made. If these people leave or disengage their creative energy, the company stands to lose a great deal of future value. If they remain in the post merger enterprise, I call them "Free Radicals". They are still "free" to do their jobs but are somewhat "radical" to the combined enterprise
Based on my direct observation, this is a critical issue post merger. Most mergers take this into account by way of financial instruments and golden parachutes. Often, people have some financial reason to stay with the enterprise. The problem is that their loyalty and their best creative energy are not for sale. Consider that these people were successful in the old enterprise. That is why they were acquired. But the new enterprise does not see the need to listen to them. After all, they are the acquiring company. They know what is best. Except where they don't.
A significant problem arises when the acquiring company is of a different ideation including a different purpose, a different identity and a different long range intention than the one that the free radicals came from and a storm is not far off. Darwin begins to step in to determine natural selection. Will the free radicals cause the new acquirer to adapt to them? Will the new acquirer cause them to adapt? Both? Neither? This becomes pivotal because free radicals are typically too wise to simply roll over and play dead.
The choices are 1) the free radicals get on the new bandwagon, 2) they remain free radicals in an organization who's antibodies begin to isolate them for extraction 3) They re-invent themselves, 4) They cause a re-invention of the enterprise, or 5) They move on to do something that they like and feel passionate about where they can get what they want.
The impact on strategic execution is that if the strategy of the new enterprise depends on the retention of the free radicals, a leadership intervention is the only thing that will prevent a catastrophic loss of talent and therefore a loss of strategic options. People contribute their best based on their ideation. If the ideation of the free radical becomes incompatible with the new enterprise, the best thing a free radical can do is exit. Incompatibility is not hard to measure. Frustration level, stress level and bottom line positive emotional response versus negative response to being in the organization is the best metric for the free radical to gage their direction. This is not to suggest a "if it feels good, do it" strategy but on the other hand, why would talented people be willing to contribute long term to a cause they do not feel right about?
Many acquisitions do not succeed because the free radicals who are strategically critical are not given enough consideration in the transaction. In business, we have progressed far beyond the acquisition of factories, equipment and fields. We now acquire human networks. And yet our merger and acquisition processes, systems and post merger leadership are still stuck back in the days of trucks and tractors as if people were fungible.
To acquiring companies, I say pay attention to the non-balance sheet assets... they are what you really paid for.
To free radicals I say adapt and stay or quit and leave but do not quit and stay... your energy is best utilized where it does not involve tilting against wind mills.