Why Employees Should Love It When You Decide To Sell

When ownership or leadership of a company decides that it is time to sell, it typically causes significant anxiety for the company’s employees. M&A is often met with skepticism about reduced wages, lost jobs, etc. According to a recently published research report, there may be a reason employees want to hope for a sale.

“Mergers and Employee Wages,” published by UNC and Duke professors Paige Ouimet and Rebecca Zarutskie, indicates that employee wages at acquired companies INCREASE an average of 9.3% following the transaction.

The research was based on a sample set of 1,435 acquisitions of public targets by either public or private acquirers from 1982 to 2001. The data was adjusted to control for outside factors such as changes in overall industry or local wages. The authors conclude “in a competitive labor market, wages will increase if the M&A increases the marginal productivity of the average employee.”

The results of the study were interesting in that it provides empirical evidence that employees can benefit from a sale, at least from a compensation perspective.

What are your thoughts on this report? Have you witnessed this firsthand with the M&A transactions that you’ve been part of?

(Image courtesy of Purpleslog)