So I'm on my second week at an internship at a boutique investment bank specializing in M&A in the healthcare and media and information services industries...
What I'm curious about is whether mergers and acquisitions typically create jobs or always result in the acquiring company laying off a significant number of employees at the acquired company to cut costs and increase efficiencies. Is there a Gordon Gekko behind every LBO? Obviously, I understand that every deal is different and has its own complexities, but in your experiences what's M&A's net effect on jobs??
Interesting question. I think that it depends on the merger, some actually create new jobs. The problem that many people fail to take into account is that they focus on the jobs that are lost today (time zero) and not at the thousands of jobs the new company can create in the future. The same thing happens with government subsidies and tariffs. People say "We need tariffs to protect American jobs", but they fail to account for jobs that will be created in other industries or jobs that can be created by lowering taxes for another industry instead of using that money for subsidies. I forget the exact number, but the number of sugar farming jobs that we save vs the amount we lose is something like $230,000. Create a stronger company today, more jobs tomorrow.
M&A is very much a disruption in a business cycle. You'll see when you start building models, trying to put together your projections/assumptions. The financials are all fine and dandy then, BAM cluster fuck extraordinaire. They have no revenue for a quarter, lawsuit here, capex spike there, half of their customer base is gone, body parts everywhere man!!! Sorry for the theatrics, but you're right, if existing employees do retain their jobs and synergies don't come together properly then yes, probably going to loose some people. What's even worse if the acquired company never reaches it's potential and is spin off or just dissolved.
I was talking to one of the associates today and he was saying how a lot of these family owned businesses that get acquired have brothers, uncles, family dogs etc, etc on the payroll and the acquirer will look to trim these "inefficiencies that don't add value" asap. Not saying I disagree with this but it caught my attention. That conversation is what led me to make the post. I just want to make sure that if I do enter this field, I'm making a positive contribution to the economy/society. and oh yeah the whole models and bottles thing. (kidding.... well kind of... i mean they're models!)
You want to contribute to society join the fucking peace corp. You want to make more money than God, join a bank.
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