![]() ![]() ![]() Many US companies are trending toward low governance or diffuse governance structures. Non-US acquirers must also consider the hierarchical structure of the new business. It is often poorly received when an executive job description is not clearly defined or when decision-making authority is dependent on the board or, even worse, on someone at the foreign parent company. At the executive level, US management is often offered an employment agreement that includes a description of the job, the executive’s responsibilities (including reporting responsibilities) and authority to make decisions. US management should also be offered employment agreements that include robust job descriptions involving decision-making authority. Granting US management equity incentives will also help to make them feel like they are sharing in the success or failure of the combined company as part of the team. An equity interest will incentivise US management to work for the success of the company and make their equity interest more valuable. This is particularly the case in the technology industry. Most US executives expect to be granted an equity incentive for their contributions to the company. Getting the management of an acquired or merged entity to buy into the direction of the company can be very helpful as new strategies and procedures are adopted.įurthermore, the acquirer should grant management incentives rewarding US management for effectively exercising the authority granted to them. They may have insights that can facilitate the success of the merged entity in the US market. US management knows the US operations that were acquired, the US market and US business practices. This can be beneficial for several reasons, not least of which is helping them feel a part of the ‘team’. Parties should take the time to include US management on the board of directors or critical decision-making bodies pertaining to the acquired business. ![]() In most cases, when the US entity is not the dominant party, the US management will not expect to have a veto right or control the board, but they will want their ideas on significant issues considered. With a foreign (non-US) acquirer, the US entity and its management that continues with the company after closing will want to continue to be consulted and have a say in significant decisions. The best time to begin successful post-closing integration is during the initial transaction structuring. The following observations focus on issues that arise when parties to an acquisition have different structures, business methods or cultures rather than the technical aspects of merging businesses. Integration of an acquired business becomes more difficult when the transaction crosses national borders and presents cultural differences. There are various reasons for the failure of a transaction and, while hindsight is 20/20, a common reason is failing to plan for post-merger integration at the outset of the deal. Far too many business combinations are not successful. ![]()
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