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Buyers in a merger and acquisition transaction oftentimes intend to rely on their target company’s management to remain and assist them with running the purchased business. Particularly in industries where human capital is the primary or perhaps only capital, such as technology or services companies, the art of retention—or motivating the existing management to remain with the business—can be the difference between a successful or disappointing acquisition.

Many buyers build retention incentives into the purchase price itself to avoid or supplement the necessity of additional retention payments. This article by Baker McKenzie Partners Derek Liu and Thomas Asmar, originally published by Bloomberg Law, offers an overview of common strategies for doing so.

 

Author

Derek Liu is a partner in Baker McKenzie’s San Francisco office. Derek handles mergers and acquisitions, and other complex corporate transactions, and has signed transactions with an aggregate transaction value of more than USD 100 billion. Prior to joining Baker McKenzie, Derek practiced at two top-tier firms in San Francisco and New York.

Author

Thomas Asmar has almost two decades of experience advising public and private companies, as well as private equity funds, on all employee benefits and compensation issues arising out of mergers, acquisitions, IPOs, financings and other corporate transactions.