Post-Merger Restructuring of the Labor Force

Abstract

We study the restructuring of the labor force after M&As. Restructuring is large. Net employment of targets declines by half within two years after acquisitions relative to matching firms. Employee turnover increases, particularly for managers, and jobs migrate to acquirers. Acquirers have a better-educated, better-paid, and more qualified workforce than targets. Acquirers hire new employees who are younger and less expensive. Mergers create internal labor markets. However, most hiring is external, especially for managers. Our results are consistent with a framework in which acquirers seek business opportunities from targets and provide the organizational and managerial capacity to produce more efficiently.

Keywords: M&A, Restructuring, Employment, Internal Labor Markets

JEL Classification: G30, G34, J24, J31, M51