Acquired employees versus hired employees: Retained or turned over?

Abstract

AbstractResearch SummaryThousands of acquisitions of technology companies result in the de facto hiring of myriad individuals into new employers every year. We analyze the effects of such deals on acquired employee (AE) retention relative to a matched sample of directly hired employees (HEs) joining the same acquirers in the same year. In a dataset with all acquisitions of VC‐backed companies in the previous two decades paired to over 30 million resumes, we find that acquired employees (AEs) turnover at a much higher rate than matched, HEs. Importantly, this difference in turnover rates is larger for AEs in higher job ranks and with advanced degrees. Likewise, we show that the postacquisition departure rate is highest for AEs in critical executive, technical, business development, and sales roles.Managerial SummaryAcquisitions of venture‐backed tech‐companies occur for many strategic reasons, including the acquisition of key managerial and technical human talent. The retention of acquired talent is thus an important consideration for the value of the acquisition. Through a dataset of over 30 million resumes, we examine the turnover rates of employees acquired through technology acquisitions in the previous two decades, comparing these AEs to their similar, organically hired counterparts. In this comparison, we find that AEs are more likely to turnover in general. Importantly, the higher turnover rate of AEs increases with seniority and education attainment and is the highest in critical executive, technical, business development, and sales roles.