Acquihired: Retained or Turned Over?

Abstract

Thousands of acquisitions of young, technology-based companies transpire each year, resulting in the “acquihiring” of myriad individuals. We analyze the effects of these transactions on the employment trajectories of acquihired employees that switch employers in consequence of change-of-control deals. Although many of these mergers are motivated by an acquirer’s desire to recruit new talent, we find that relative to a carefully selected and well-matched sample of organically hired employees, acquihired employees turnover at a much higher rate. Moreover, the estimated jump in turnover for acquihires increases in their job rank and education levels. Post-acquisition turnover rates also are particularly high for individuals in critical executive, technical and sales roles. This pattern of results draws into question the value of such transactions to the modal acquirer. To conduct the analysis, we build a data-set with the complete roster of acquisitions of technology-based companies in the previous two decades, which we pair to over 30 million resumes to track the career histories of a large fraction of the professional workforce, before and after the time of the M&As in the data.