The hidden veto
Every buyer has a list of people they need to stay. Sometimes that list is explicit and written into the deal. Often it is implicit — a few names that, if they left, would meaningfully change what was bought. Those people effectively hold a veto over the transaction.
Identifying the list
Before going to market, write your own version of that list. Usually it includes:
- The operational lead who actually runs the business day to day.
- The commercial lead with the deepest customer relationships.
- The technical or expert lead whose knowledge is hard to replace.
- A small number of long-tenured employees whose departure would unsettle the team.
If you cannot identify them, the buyer will, and they will use the leverage.
What to do before going to market
Make sure these people have current employment contracts with reasonable notice periods and confidentiality terms. Make sure their compensation is fair for the market. If a long-promised promotion or salary review is overdue, do it now — not as part of the deal.
What to do during the process
Bring key people into the diligence at the right moment. Too early and you risk a leak; too late and the buyer feels they are flying blind. The right moment is usually after exclusivity, before final legal documentation. Be honest about what you can promise and what is the buyer's call.
Retention after the deal
Most deals include some form of retention — a cash bonus, equity in the new structure, or a rollover that ties the seller and key employees to the next phase. The best retention is not financial. It is the sense that the buyer respects the team, understands what they built, and is not about to change everything in the first month.
A buyer who turns up on day one with a reorganisation chart loses the team. A buyer who turns up to listen keeps them.
Key Employee Management Timeline
Managing key employees effectively across the M&A process is critical for a smooth transaction. This table outlines key actions and considerations at each stage.
| Phase | Key Action | Rationale | Risks of Neglect |
|---|---|---|---|
| Pre-Market | Identify critical personnel & secure contracts | Proactive risk mitigation, show strong foundation | Buyer leverage, unexpected departures, deal breakdown |
| Diligence (Post-Exclusivity) | Introduce key employees to the buyer | Build trust, allow buyer assessment | Buyer distrust, perceived lack of transparency, deal delays |
| Post-Deal | Implement retention plans | Ensure continuity, motivate performance | Employee turnover, loss of institutional knowledge |