Post-Merger Restructuring of the Labor Force

Abstract
We study the restructuring of the labor force after M&As by taking a comprehensive view that analyzes targets and acquirers. Restructuring is large. Net employment of the combined firms declines relative to matching firms, and the decline is concentrated in the targets and in the one-third of M&As in which targets are closed and fully integrated into acquirers. Employee turnover is very large, particularly for managers, and most turnover is through the external labor market, whereas internal transfers play only a moderate role. Turnover involves that more jobs than employees migrate from targets to acquirers and that the composition of the labor force changes: acquirers hire newemployees who are younger and less expensive than those who leave. Mergers create more hierarchical firms with more managers, especially if firms grow and become more complex. Labor productivity increases after mergers. The findings are supportive of theories that focus on the role of management, management practices, and the internal organization of the firm as key factors of restructuring.
Joint paper with Britta Gehrke, Stefan Obernberger and Christoph Schneider.