I just spoke to a Representative who was fearful that his company might be for sale. He said, “I think I see the signs!” When he reviewed some of them with me, I said, “Are you kidding? Do you need a sign tattooed to your forehead? The sale of your company is no longer the Elephant in the room, in fact the Elephant is standing in the front yard next to the For Sale Sign!” His company has been approached several times last year by another company….once that Elephant is out of the room it never goes back in! That company is up for sale even if they don’t want to be sold. They are now on the radar for other companies to consider them for purchase (friendly or hostile takeover).
Unfortunately, this person decided to take a job with this company last year! One must learn to read the EARLY SIGNS of an impending sale and it can be done with a little thought and digging even before you hire in! It is also common for long term employees, oddly enough, to not see the early or late selling signs (or maybe they just don’t want to believe it?)!
So what does a possible sale or even a purchase of another company mean for you and your career? Well first of all, do not panic! Even if your company is sold tomorrow it could take some time for them to complete the merger depending on how large the company or division. I have been involved in billion dollar mergers that take up to a year to settle out. Smaller purchases, like a large company buying a company under 30 million in sales or smaller, could be a shorter period of time depending on the product and market synergies between the two companies. Let’s just say that after the purchase, you have anywhere from 3 months to a year before changes are felt in the field! But let’s direct our attention to actually gaming the situation well before a company is known to be up for sale! Understanding how to do that FIRST will prevent you from panicking and actually put you in a place where you can take advantage of being sold!
So first of all, what are the possible signs that your company may be preparing for sale? By the way, I was with a company that for YEARS was rumored to be for sale. We later found out we were up for sale, but no one wanted us and we were finally sold 10 years later! Boy, I made a ton of money there too during that time! I was young and could risk staying! Guess what? When we did get sold, a bigger and better company bought us and they promoted me; your company being sold CAN BE a huge career opportunity for you too!
I understand we are in a much different environment now and yes, when your company is sold or even when your company is buying another one, you immediately have an element of risk being added to your employment (especially if you are in a support position; Human Resources, Administrative, Sales Training, Clinical Support, Marketing and Sales Management). Here are the GROWING warning signs that your company MAY be heading or is currently in a performance decline that could result in preparation for it's ultimate sale:
- Your company or division has not been hitting the numbers for 3 years or more.
- Unforced movement at the top (departure of the CEO, Presidents, VP’s and etc. or worse, a revolving door of those levels for the past 10 years…forced or unforced). Higher levels know when a division is doomed and will leave BEFORE it happens unless they have a nice umbrella package where they walk away with a huge chunk of change if they stay.
- Forced movement at the top (same level of people listed in no. 2 people are being blown out, especially repeatedly within the past 10 years). Typically the board or the CEO is trying to find the right people to turn the company around and it is still considered “a people/leadership problem” that can be fixed. Plus it will typically save a CEO’s job for awhile firing people beneath him (same for a President, who will begin firing the VP to save their job for awhile or a VP firing a Regional VP level….it is easier to blame lower levels of management and it just may be a leadership issue UNLESS for years multiple new leaders can’t turn it around!). Regardless, the cascade can start at lower levels of firing and actually work its way uphill until the CEO or Board says, “Enough! Get rid of the people at the very top who are developing the vision and the overall strategy….because it must not be the people underneath them…it has got to be the person developing the strategy and leading the company (CEO or President Level)!” As you can well imagine, this trickle up theory can take years to unfold or as little as two or three years in a highly visible company, but the common denominator is the company or division is NOT PERFORMING against their competitors, losing market share or growth numbers BELOW the national (and/or overseas) market segment growth. Merely go to Yahoo Finance, if you work for a publicly held company, they do all the financial work for you (the answer is in the numbers!).
- Whipping boy mentality begins to take hold in a feeble attempt to get the sales force to hit quota and produce numbers. Typically the quota numbers are ridiculously high compared to last year sales and not within the market share reality of the company or even perhaps the overall market segment they are within! Management is trying to save their jobs and promising BIG NUMBERS to the big boy’s/gal’s above them….now they gotta whip YOU to try to hit those stupid numbers and pay you less on an unrealistic commission plan built off those quota numbers (which also helps the bottom line!).
- Loading year end numbers into dealer’s where possible to boost the number to the inside sales number (yes, there are two numbers, the quota numbers for the sales force as reported by dealer re-sale numbers and the true internal profit and loss number that counts for upper managements bonus: that’s ALL sales baby! NOT just traced sales from dealer to hospital). National Accounts people know when they are pounded to load the dealers to hit that internal number for management, listen when you hear this being done! Listen real hard if this is done year after year; they are banking on one of those years to catch the sales up with “real INCREASED sales to the end users; hospitals, physicians, clinics, home health and etc.” Stupid..right? It is like paying off a credit card with an advance off another brand new credit card and the result is always the same; one is digging a bigger hole to fall into!
- Expense budgets are cut even to the point of declaring no air travel or pre-approved only overnight business trips (helping to improve the bottom line).
- Shifting of products to different buckets and/or creating new divisions. This is usually when smart first line managers and sales representative start getting nervous, if signs no. 1 through 6 above have been happening for awhile and nothing is turning around, then BEWARE, this could be the preparation to sell all or segments of the company! They may be creating a new division to dump their basket of unwanted products, sticking a bow on it and putting it up for sale. They may even take an existing division that is underperforming, but has some products they don’t want to lose, and strip those valued products out and place them into a “keeper” division. This can also happen when a group of products are not in synergy with the core product line of the company or the products or division is not part of the overall strategic forward plans of the company; think of a Bristol-Myers Squibb (a pharma company) selling Convatec (a medical disposable and device unit). In addition, a business catastrophic event can also spur a sale of a division immediately to raise funds to get themselves out of a mess: think Fen-Phen Dietary Drug Lawsuits and Wyeth (now Pfizer, a pharma company) selling Sherwood Davis & Geck (a medical disposable company) to raise money for the legal battle or a pharma company who’s top anticipated drug for the pipeline DOES NOT get FDA approval. I was an AVP with Sherwood Davis & Geck when that happened and I knew the minute the news hit the airways (and internet) that my division would be sacrificed to raise the money for the legal battles that would go on for years, even though we were hitting the numbers. In that catastrophic scenario we still had 6 months before we were sold to Tyco (now Covidien). These are unusual events so we will stay with the original concept of a non-performing company/division, but I wanted to mention that scenario so you can recognize them when they happen and yes, my old division was less profitable than pharma and was really the stepchild of a large pharma company; it was easy to sacrafice us and we probably would have been sold down the road anyway.
- Top Management is now retained (think CEO, President, Director of Marketing, VP of Sales); they will be needed after the sale and they float them a stay clause for helping the buying company a smooth transition; they sign disclosure statements for maintaining secrecy from the masses. Now the drive is really on to do some quick fixes to make the company more profitable for sale (think of it as putting on a fresh coat of paint!).
- Second Line Management may be reduced (think Region Vice Presidents or Area Directors who have first line managers reporting to them). This level may be eliminated altogether.
- First line Sales managers are not backfilled and actually a few may be laid off.
- The First line Sales Managers who are left are flown mysteriously back to corporate for private meetings once or several times. They are helping top management realign territories and prepare for which individuals get laid off. They are often told, "It is just a needed restructuring because they are not hitting their numbers and the company needs to refocus their resources."
- The company does not backfill ALL vacancies just critical areas during this phase. Think of smaller territories not getting filled and maybe even absorbed by neighboring territories by a single representative. So in other words, territories at every level get larger with fewer people running them.
- Clinical Support position are not backfilled or actually eliminated
- Layoffs and downsizing’s begin with the sales force.
- Sales numbers are still away from the quota mark.
- Rumors on the street they are for sale…TRUST THE RUMORS even IF the CEO or board of the buying company or the company being sold deny it. It is acceptable in the business world for them to lie about this, and in fact it may be crucial (and perhaps a legal issue) if they say something that affects stockholder value until everything is official.
So why is it that many Medical Sales or Pharmaceutical Sales Reps. call me in a total daze saying, “I just didn’t see it coming!” Step 14 hits them in the face and they did not read any of the signs before it! Believe me, at least 1 or 2 indicators are ALWAYS there unless a hostile takeover comes out of no-where for a hot little company that is hitting their numbers; typically those types of companies need the hot employees who work there to keep it hot after purchase! Trust me, the layoffs we have seen in this medical and pharmaceutical industry have not been hot little companies.
So let’s get back to my original question, “What does a possible sale or even a purchase of another company mean for you and your career?” Now I will give you an answer you will hate, “It depends.” Most people fail to see the early signs, so they don’t build an effective career preservation strategy and, by the way, one of those strategies could be to stay. The buying company is more than likely a better company than the one you are working for or your company wouldn’t be up for sale in the first place! The buying company has the cash or leverage to do the deal, they are in a strength position. I have heard many people who survived the downsizing period or even left right before it tell me, “I should have stayed longer, I wouldn’t have lost my job after all and I would be making more money than the company I fled to!”.
I will leave you with this, first begin to see the signs that you are in a growing unstable environment, start building your strategy as each step of your environment begins to unravel EARLY ON! I will address how to build that strategy in the next Blog Article! So for now, watch and recognize the signs; early detection of paranormal corporate activity is critical to placing your first building block of your career strategy together BEFORE your old house is sold out from under you and you have no place to go but out in the cold!
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