Companies enhancing M&A retention strategies, WTW survey finds
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NEW YORK, April 16, 2024 (GLOBE NEWSWIRE) -- A majority of companies (
“Shoring up key executives and employees is important to a successful merger or acquisition,” said Josephine Gartrell, senior director, Executive Compensation and Board Advisory, WTW. “To that end, retention agreements play a critical role in keeping talent at target companies both during and after the transaction. The challenge is how to structure retention agreements and determine which executives and employees at the acquired companies should be offered them.”
According to the 2024 WTW M&A Retention Study, acquiring companies tend to offer retention agreements to more C-suite executives and their direct reports compared with other salaried employees. In fact,
Most acquiring companies use cash retention bonuses for senior leaders (
Moreover, retention agreements are usually time-based for senior leadership (
The survey also found the majority of respondents are optimistic their retention strategies will be successful. Nearly six in 10 respondents (
Aside from monetary initiatives, the research suggests companies can consider enhancing the employee experience to prevent employees from leaving. Enhanced career opportunities and promotions are the non-monetary retention tactics cited as most effective for retaining senior leaders (
Among other survey findings:
- Almost one-third of respondents (
31% ) ask senior leaders to sign retention agreements before the deal is signed. Another38% ask them to sign agreements when the deal is signed or between the deal signing and closing. Other employees are more likely to be asked to sign agreements at the deal signing or after. - More than one in three companies (
35% ) award retention agreements or one-time special payments to certain of the buyer’s employees, such as those working on the integration of the two companies.
“With indications that M&A activity could gain momentum in 2024, retaining and engaging talented employees will remain a top priority. Acquiring companies have both financial and non-monetary tools at their fingertips to help achieve that goal. The key for many of them is structuring a retention agreement that will be enticing enough to keep those employees at the company,” said Ratan Narayanan, director, M&A Consulting, WTW.
About the survey
The WTW 2024 M&A Retention Survey was conducted during September to November 2023.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you. Learn more at wtwco.com.
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FAQ
What percentage of companies use retention agreements according to the WTW survey?
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When are senior leaders typically asked to sign retention agreements?
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