Risks and Realities of Post-M&A Board Reorganisation: Just how Vulnerable are Directors Following a Merger? 

White Papers | July, 2016

M&A activity remains the number one method for rapid transformation of a corporate’s fortunes. With such dramatic change come the inevitable job losses. While much of the public and political focus is on larger-scale, more junior level job losses, C-suite positions are also at stake. The important question for those concerned is: to what extent do the combined boards of the two companies shrink after an M&A deal?

In order to understand the risks we have conducted research across a selection of major M&A deals over the past ten years, analysing the board composition both pre- and post-deal. Our aim was to identify what proportion of directors retain their positions once the transaction is complete, helping individuals to better prepare themselves for what might follow, so that they can turn threats into opportunities. 

Our findings highlight which job roles are most at risk and how fast changes can happen – information which should prove critical in guiding career strategy for executives at senior level. The findings help solidify the view that individuals should consider pro-active steps to mitigate risk and drive career progression, making contingency plans by exploring new options and challenges elsewhere before the process of attrition starts.

The statistics suggest that, following a merger, directors are more at risk of losing their positions than any other employee group, making discussions for sensible notice periods in the event of a change of control an understandable requirement. Other stipulations can include the introduction of change of control clauses which are used in the US to ensure due consideration is given to takeover approaches.

Executive Summary

We analysed Board composition before and after 50 M&A deals. Our key findings include:

  • Almost half of executive directors have left their post at the combined company within two years of the deal

  • Two-fifths of non-executive directors at the combined companies no longer hold their position inside two years 

  • Counterintuitively the likelihood of job losses is no different when UK companies are taken over by overseas businesses

  • With 44% of all directors losing their position, levels of attrition when the target is a continental European company are similar to that experienced by UK companies

  • CTO and CFO positions are most likely to be in the spotlight, with several factors at play 

Assessing the scale of Board rationalisations post-merger  

Across-the-board headcount reductions are almost inevitable post-merger as essential restructuring takes place to remove duplicate roles. But whereas measures to achieve efficiency gains and cost savings may take considerable time to implement company-wide, personnel duplications at the very top are often the most immediately obvious, as well as the most expensive per capita. Therefore they are usually the first to be addressed.

Our analysis of over 50 M&A deals reveal how swift decision-making over rationalising senior-level executives can be.

Our research found that board-level directors are highest at risk of losing their place at the table after a merger – far more than any other category of staff. In fact, 43% of all board seats are lost inside two years following a deal.

Of these, executive directors are the most at risk in the short term – with almost half (47%) losing or leaving their post within this time. For non-executive directors, the proportion is slightly lower, at 41%.

To put this into context, it would be almost unheard of to see a similar percentage fall in the combined total workforce – and rarely in an individual function – within such a short period post-merger.

 What percentage of board-level directors are no longer in their seats two years after M&A activity?


No doubt these senior individuals are amongst the most knowledgeable within the organisation and may, not unreasonably, think that their positions are more likely to be secure, particularly as companies can often present the transaction as a ‘merger of all the talents’.

However, these findings suggests that the first year post-merger may not be the “safe zone” that many directors expect, leaving them less time than anticipated to review their positions in the new entity and make alternative career arrangements should the need arise.

It is important therefore to start making contingency plans early; networking with contacts and executive search firms.

Do cross border takeovers pose less of a threat than domestic mergers? 

It is often assumed that takeovers of UK companies by foreign businesses pose less of a threat to overall job security. After all, overseas corporates looking to break into the UK market or build market share here will need to retain a robust foundation of talented staff in order to maintain the acquired business’s existing knowledge base.

However, while this may be true up to a point, the reality is that in fact it makes very little difference in terms of security at the top. Our research suggests that C-suite roles are as much at risk regardless of whether the acquiring company is based in the UK or overseas.

In today’s globalised business environment, many companies are adept at acclimatising rapidly to a cross-border merger, analysing the relative strengths and weaknesses of both businesses and adapting their internal structures accordingly. Ambitious international businesses are just as keen as UK businesses to want to integrate and streamline their operations quickly. There is also the question as to whether broader cultural differences between executives from different countries might accelerate attrition.

 In cross border takeovers what percentage of board-level directors are no longer in their seats two years post M&A activity?


Total Directors

Executive Directors

Non-Executive Directors

All M&A




Takeover of a UK company by an overseas company




Takeover of a continental European company




Takeover of an overseas company by a UK company




The good news: taking advantage of the strategic battle for talent 

Whilst the early promise of “a merger of equals” and “a true board of talents” all too often gives way to a rapid attrition of directors, there is good news. There are instances where companies choose to keep hold of key talent in the acquired company when individuals are viewed as being of strategic value, even if they can no longer keep them on in the same role.

In these cases, companies will find ways to ensure they do not lose directors who are instrumental to the future of the business, by looking at how they can use these individuals in the areas they think they’ll be most effective.

As directors can often be viewed as a “flight risk” in the aftermath of a merger, it may be the case that the acquiring company needs to offer more attractive terms in order to ensure they retain directors they view as being of high strategic value. They may even create new and specific roles for them.

This approach is particularly common in sectors such as pharmaceuticals or technology where in-house experience or industry-specific expertise may be especially valuable. Whether this provides a solution long-term will clearly depend on specific circumstances.
Speed of deal completion may also be a factor here. If the integration is hoped to be completed quickly, the acquiring company may look to retain a larger proportion of the original core team. This will ensure any disruption to the business is kept to a minimum and allow for a longer ‘bedding-in’ period for new directors. This is particularly common in high-growth sectors.

Where staying put is not an option, directors could well find ample opportunities elsewhere. Recently merged organisations can also prove fertile ground for other companies seeking new C-suite talent.

With the fall-out rate at senior level so high, it makes sense for other businesses to entice successful directors and senior executives into joining them, knowing they may be displaced in the post-merger organisation

CFO and CTO roles in the spotlight

While the specific factors behind one company acquiring another determine which roles are most vulnerable in the new board composition, DHR International have often found two positions tend to stand out: the CTO and the CFO.

Obviously on a practical level, there is a simple issue of duplication. Clearly there would be inefficiencies and confusion in having two heads of the same function, but it’s rare that once an individual has held a top post that they are happy staying on as number two, even in a much larger organisation.

However, there’s often more to it than that. There can be several other reasons why the roles most at risk after an M&A deal are often those of the Chief Technology Officer and Chief Financial Officer.

CTOs can often find their positions under threat if one of the drivers behind the merger is a technological advantage over competitors that is seen not to be fully utilised. In sectors where innovation is key, companies will be looking to drive forward infrastructure improvements or deliver applications which can enhance customer service and experience, helping the new company gain ground quickly. This may require a different skill set or level of experience, or even a completely new approach, triggering a change in personnel.

CTOs can be particularly vulnerable in retail challenger banks, for example, as the technological offering plays such a key role in shaping the market, attracting customers and raising revenue.

Similarly, it can sometimes be the case that the post-merger composition or size of the company exceeds the experience of both CFOs. In this case both executives are at risk of losing their positions in favour of an external director possessing the requisite expertise.

Our research also suggests that upon completion of a merger, the acquiring company can often look to evenly distribute the senior roles in the reshaped organisation.

For example, if the CEO of the acquiring company maintains their position, the Chairman and CFO roles may be filled by directors from the acquired company. In this scenario, it is often the CFO of the acquiring company who is most likely to lose their position. Our research has highlighted some examples below.

Some companies look to evenly divide the senior roles after an acquisition, but how does this split look?

  • Ladbrokes and Gala Coral are finalising a merger, with Paul Bowtell (CFO of Gala Coral) set to remain in the top finance role. The CFO of Ladbrokes is set to step down once the M&A has been completed

  • In February 2016, Paddy Power merged with Betfair. Alex Gersh, Betfair’s CFO, is set to take the role of CFO whilst Paddy Power’s CFO will miss out, despite Paddy Power’s 52% ownership of the combined equity


There are signs that global M&A activity may be calming down somewhat from the heady levels we have seen recently, but post-recession restructurings are set to continue, particularly in sectors such as financial services, while appetite for strategic acquisitions remains strong.

Businesses in all sectors and of all sizes are looking to M&A opportunities as a means of achieving growth, delivering a competitive edge and driving economies of scale.
Despite the uncertainty, it can be an exciting time. Executives and non-executives will want to ensure they are in the best position to use the situation as a springboard to move onwards and upwards.

The truth for many at the most senior level is that it is usually those in the top positions whose jobs are first in line for re-evaluation. For every Board member who stays, it’s almost as likely that another will go.

Being prepared for the possible outcomes in advance is crucial for individuals to turn the situation to their advantage, looking for new opportunities to develop and enhance their CVs. As the old saying goes: forewarned is forearmed.