The human resource management issues during an acquisition: the target firm's top management team and key managers

When a company is acquired, the amount of money paid for the company is normally some multiple of earnings. The assumption is that the purchase price is higher than the tangible assets of the company. Therefore, the acquirer believes that there is value in the company beyond the balance sheet of the company. Frequently, some percentage of the ‘premium’ paid by the acquiring company is for the top management team and/or key managers. This paper examines the role of the top management team and their retention on the post acquisition performance of the company.