Job Offer During a Merger? Look for the Trigger
A. You're dead-on correct to tackle these issues now while your offer is in play. Unlike your future colleagues, you have considerably more leverage to fashion a net of protections should an acquisition blow ill winds in your direction.
You don't mention how senior you are, which will, alas, make a difference in just how much protection you're likely to get. The holy grail of safety nets is known as a 'change-in-control' agreement and according to employment lawyer Ken Taber, it's typically only doled out to senior management types.
These coveted agreements come in two flavors: single trigger or double trigger. Both require a change in control of the company, such as a merger, acquisition, or even spin-off. Under each, your departure from the company following a change in control triggers a lump-sum payout and/or deferred compensation. But under a single-trigger discharge, you collect your payout even when you decide on your own to leave. A double-trigger agreement, meanwhile, layers on additional circumstances like substantial diminution of your duties, a change in location, or your involuntary termination.
One point of warning: Tax laws surrounding deferred compensation are notoriously complex-and even more so under the newly-effective American Jobs Creation Act. Change-in-control agreements that don't satisfy the Act's requirements can yield substantial tax penalties. You would be wise to hire a lawyer now to parse through the possible consequences-and ask your future employer to indemnify you against any potential excise taxes.
If you're too junior to merit the red carpet treatment upon your (potential) exit, there's still hope. 'Even if a formal change-in-control agreement is not attainable, you may still be able to secure meaningful severance protection that would be triggered either by the involuntary termination of your employment or your resignation for 'good reason,' advises Taber. Examples of 'good reason' might include an acquisition of the company and/or a material change in your duties.
Make sure also that you won't be constrained by a non-compete provision in the event that you leave the company, voluntarily or otherwise, following an acquisition, advises outplacement consultant Rod Williams. And a good severance package would include the services of a reputable outplacement firm, or an allowance for finding your own.
Presumably, however, you are hoping not to be fired or demoted as a result of an acquisition. Here's where you'll need to tweak your political antennae. 'Mergers are never easy on the interpersonal front,' warns executive coach Maggie Craddock. 'Often when firms merge, skill sets are replicated and the person who wins out on the hierarchy is the person with better political connections. Be thoughtful about the individual you will be reporting to and any new team you will be integrating with. You want to make sure you will be given a fair shake and that you're not in danger of being dismissed as someone who is not part of the in crowd.'
Finally, a firm in the shadow of a potential acquisition may well find it hard to attract talent-and may goose up its offer as a result. Do make sure that your own tolerance for risk isn't being compromised by a shimmering pot of gold or an opportunity that seems too good to be true. On the other hand, if you successfully manage the riptides that will surely follow an acquisition, this could be the opportunity of a lifetime. Listen to your gut, and play to win.
Next week's question:
Q: For the last year and a half, I've been trading my own book of commodities and currencies from home. Previously, I worked for over two years at two top European investment banks analyzing and structuring non-investment grade bonds and loans. I am now looking to move into a more structured lifestyle in a commodities related role, either as an analyst, junior portfolio manager or trader. Can you give me any advice on what training or qualifications would be useful (I've already passed the CFA level I & II exams) and also what my job hunting strategy and salary expectations should be?
What would you advise? Send your answer to email@example.com.
Look out for the Experts' answer to this dilemma and readers' comments on Ask the Expert next week. If you would like to submit a question to our panel of experts, ASK THE EXPERT.