Acqui‐hires: Redeployment and retention of human capital post‐acquisition

Abstract

AbstractResearch SummaryAcqui‐hires are now a prevalent strategic mechanism by which firms obtain talented human resources. They differ from traditional acquisitions in that they are always integrated and the focus is the people, not the product or service. Thus, how firms reconfigure through the redeployment and retention of acqui‐hired human resources during post‐acquisition integration is particularly critical. We find that when the acquired start‐up has disruptive (vs. nondisruptive) know‐how, the acqui‐hired team is preserved (vs. dispersed) and integrated as a whole into an acquirer's existing business unit, and also that the founder of the acquired start‐up is assigned to a high status position. Furthermore, we show that a lack of fit between acquired know‐how type and integration mode has a positive relationship with the premature exit of acqui‐hired founders.Managerial SummaryAcqui‐hires are a form of acquisitions in which the acquiring firm's goal is to obtain the talented human capital of the target firm. Our study addresses how the acqui‐hired team is integrated into the acquiring firm and what status position the acqui‐hired founder is given, post‐acquisition. Our results reveal that these depend on the type of know‐how being acquired; if the acqui‐hired know‐how is disruptive (versus not) then it is more likely that the team is preserved (versus dispersed) and the founder is given a high status position at the parent firm. Managers should be aware that a mismatch in integration—such as acqui‐hiring disruptive know‐how and not preserving the team in a business unit—can have negative implications such as the premature departure of the founder(s).