The owner is selling his company to private equity.

January 22, 2025 1:57 PM

I have been burdened with this knowledge for more than a month now. I had to sign an NDA, as I have been tasked with collecting a lot of requested information. "Fortunately", a long-time work friend also signed one, so we can commiserate. People are going to lose their jobs. My job here of 12+ years no longer feels safe, though the boss assures me that not much will change. Yes, some people will be cut, but not me. I think he is foolishly and wishfully naive about it.

I know he WANTS things to stay the same, because he doesn't want to feel guilty. I think he convinced himself everything will be fine, these investors are in another state and they just want to "help the company grow". I tell him, they don't want to help this company at all. They want to suck all the money out of it, of course! Do you even live in this world? I can say that to him, but I am an older woman and mostly he is sure I don't understand. He will be making a lot of money. The new owners will be putting a strict budget in place; we will be corporatized.

He claims he spoke to someone in the same industry (different state) who was bought by these people, and it's been a year, and they have largely left the business alone. He claims to have done research. I assured him that any of these people can say whatever they want, but after they are the owners, they do not have to honor any of it that is not in writing. They don't care about the people.

Could this be at a worse time in the U.S.?!
Several of our guys, who have worked for this boss for 20+ years!, do not have legal papers. The boss has some idea he will set them up in a new company and hire them (he is staying on as CEO). Fantasyland. Not only will they no longer have a job, is there a chance these new owners are going to report them? The other person who knows only recently got legal papers himself. And he is even more sure the boss has no clue. [At least we are in a blue state, but that is not really going to help.]

I am struggling with this knowledge and what is the right thing to do. I can't quit, that won't help anyone, even if I could afford it. I know they will keep me at least for a while, as they will need my help to switch to new systems, and I imagine I will have to help them so they can eventually take my job? I probably have six months. Or maybe not. Of course I will be job hunting. Of course there is a chance I am wrong about most of this. I doubt it. I feel guilty for everyone who will be blindsided. They will be right to be angry with me.

I come to the office and have to act like this news is not about to send a wrecking ball through the place. I know that this kind of thing happens all the time, and to SO many people, including some of you guys. I have been watching mindless longform media to take my mind off all of it. Got any advice?

posted by anonymous to Work & Money (16 answers total)

Is there any way you can anonymously (even note on car or something) your undocumented coworkers that something is coming? It is possible they may not only lose their jobs but even be extensively detained before deportation
posted by toodleydoodley at 2:04 PM on January 22 [2 favorites]

I don't think it would violate your NDA to print up Red Cards in the languages most relevant to your coworkers and have them sitting around the break room.
posted by epj at 2:08 PM on January 22 [8 favorites]

Trying to guilt the current owner out of selling won't do any good and it will hurt your future with this company. Stop.

Your coworkers might be mad when they find out, but you can't tell them without harming yourself. They can feel however they feel, and you need to focus on what you can do, which is look for jobs and figure out how to be useful to the new owners. If you find a new gig, you can potentially help them get jobs, too.

Your undocumented coworkers likely know that deportation just became a lot more likely. If they've been in the U.S. 20 years, they're probably smart/integrated into the community enough to look after themselves. If you don't think that's true, sure, print out some "know your rights" cards for them.

Keep coping as best you can and searching for jobs. Try to have some fun and do some joyful things to keep this in perspective. Talk to people in the ways that you're allowed by the NDA (therapist?). If they lay you off, you will get unemployment. This kind of thing does happen all the time, and people get through it. It's not as terrible as your brain is telling you right now.
posted by momus_window at 2:30 PM on January 22 [12 favorites]

There actually are some private equity companies that have the intention and the capability to help a portfolio company grow, whether organically or through strategic mergers or bolt-on companies. Whether your private equity company is one of those, I couldn't say. But if you know or can find out the name, there's a lot of research you can do online. If you have any contacts in private equity, it's ironically a pretty small industry and not difficult to get the inside scoop about any PE firm out there. Before your anxiety gets the better of you, get some more information.
posted by DrGail at 2:48 PM on January 22 [10 favorites]

A corporate approach means adopting systems like E-verify or Experian's Workforce product. Both of these will quickly and automatically lead to the termination of all non documented staff. If this PE org is based in someplace like Texas they are legally required to check, and it’s pretty unlikely they will make an exception for your outfit.

I would guess that the private equity bros have allready looked at the staff background/situation and it is understood how desperately the workers might need their jobs or how many will exit over status. All a NDA means is that no one can know you are the source, and you don’t need to be more specific than ‘boss sold the outfit to corporate’.
posted by zenon at 3:20 PM on January 22 [2 favorites]

As DrGail says, there is some diversity in PE. Yes, many of them burden the acquired company with unreasonable debt and do other shenanigans that drive down long-term value. Others do grow the company responsibly. Some are not very meddlesome. In any event, they typically plan to re-sell the acquired company in 5 to 8 years and the next owner is often another PE firm.

Because of that timeline, even if you have a great experience or relationship with the new ownership, it is likely to change hands again fairly soon, so be realistic about the present and plan for the future.

I recognize that you anticipate chafing with corporatization, but handling your part of the transition with diligence and competence is a feather in your cap, if you choose to take it. You can promote managing that difficulty in a constructive way as an experiential asset in future job interviews.

I agree that educating yourself about the new owner and the PE industry may have value. PE exists to serve the investment goals of the enormous pool of capital that it is managed for the world's wealthiest individuals and families - trillions of dollars aiming for 15% year-over-year returns. While that wealth concentration and inequality exists, something like PE will exist to serve it. It can't hurt to understand what's going on, even if you can't change it right now.
posted by Glomar response at 3:31 PM on January 22 [2 favorites]

Every company I worked for got bought out at one time or another. It was never a positive, though it wasn't always horrific. Start that job search now; you don't have to show loyalty to the company when it doesn't show loyalty to you. Plus, it sounds like you're just under the CEO, thus, just the sort of person he may delegate actually doing the layoffs to.

If your boss is staying on, probably things won't change dramatically at first. But I'd wager the first casualties will be non-product types: the new owner figures, those guys don't need an HR department, an accountant, maybe not even a sales force.
posted by zompist at 3:33 PM on January 22 [3 favorites]

You seem very certain about the outcome of this. There are definitely bad possible outcomes here but your certainty makes me think you may be catastrophizing.

Regardless, the way to deal with this is to treat everyone involved as adults, responsible for their own lives and own outcomes. It's good that you want to help, but your responsibility ends there.

I've been on both sides of the layoff equation. The closest I've ever had to a manager spilling the beans was to casually mention that he liked my work and if I ever needed a reference he'd be happy to provide one. We all knew the company was in a bad way so the message was pretty clear.
posted by Tell Me No Lies at 4:01 PM on January 22 [4 favorites]

It depends a lot on the PE people, what other companies they have in their portfolio, and what redundancies would be created in the purchase. If this is part of an industry rollup (as you alluded to), certain departments could be at risk. You do not need two or three HR departments. IF the other company in the industry that is owned by this PE firm has one, that is a logical place to start with layoffs. I had a trading firm that purchased other trading firms and the two areas where we realized savings was in HR and Compliance.

As for undocumented workers or workers without papers, it also depends on what they do. Are they involved in the manufacturing process or the sales process? Is what they do part of or critical to the revenue side of the business or are they just an expense? I would be less worried about their legal status than their job function. To make up an extreme example, if the person is in charge of cleaning and can be easily replaced, I would be concerned. If the person is the one person who knows how to run the machine that makes the widgets, I would be very much less concerned. At the point the company may be going public, that is when having undocumented workers may be an issue. Certainly would be a disclosure item in due diligence.

Without intending to be snide, welcome to corporate America. Most companies, not family owned or not where the owner is involved in the day to day running of the business will constantly evaluate their employees for what the bring to the business. Employees that are expenses rather than revenue generators (sales persons, traders, investment bankers, etc) will face an evaluation of "can the company do what it does without them.

As for you personally, it sounds to me as if you are close to the boss and are helping him with due diligence. That is making you more indispensable. You know where the bodies are buried. I think this sale buys you more time than most. 6 months a year from now when new bosses figure it all out, then I would be more concerned about my job depending on what it is. If you are in accounting, that is a necessary function, but also one that can be rolled up with other accounting departments as per above.

Would I look for a new job immediately? That is about personal risk. I would give the new owners a chance. While everyone, EVERYONE, is replaceable, I have confidence that I am doing a great job at what I do and will have earned the right to stay. If your job function is not somewhat critical to operations, then I would look ASAP.

As for warning the people without papers, I would do nothing. It sucks having the information, but breaking the NDA, even if you think you are doing it anonymously as suggested above, can open you up to all sorts of liability. In the corporate world, the first law of nature is cover your own ass first.

Good luck.
posted by JohnnyGunn at 4:07 PM on January 22 [1 favorite]

I work for a company that was purchased by a PE firm about two years into my tenure there. It's a much better place to work now, our benefits are better, our employee protections are better, and my boss (who was installed by the PE firm) is the best manager I've ever had. The company I work for became the "brand name" company for the sector, and in our company's name we've acquired multiple other companies in the last several years. Some people lose their jobs when this happens, but at least the severance packages are better than they otherwise would have been because of that PE capital, so at least there's that. Half of companies that have been acquired by ours have been on the edge of financial death, so one could definitely make an argument that overall many more people have kept their jobs than lost them from this process.

Could this be bad for you and your coworkers? Absolutely. Speaking as an HR person, your undocumented coworkers give me agita because of the compliance mess that would be for my team. No one's reporting anything to anyone though, that would be more of a mess. It would either be they go on leave until we can legally hire them, or they lose their jobs unfortunately if there's not a legal path to hire. But it could also be a good thing, or at least a not only bad thing, to have a more formal structure in place. (If your company is hiring undocumented workers, how many other compliance and labor violations are they making?)

If you think your job is on the line but they need you for a while, make noise to your boss about a thick retention agreement so you can take care of yourself.
posted by phunniemee at 4:48 PM on January 22 [5 favorites]

Unless the company is being acquired solely for IP or market share/name recognition, they are counting on acquiring a set of people who work well together and have established skills and experience in their field and in the specific geographic location where you're located.

This is true for a small medical practice as well as a landscaping or plumbing company.

They very much need and want the staff to stay intact, at least for a while.

You'll probably never have this much power again, so use it wisely. They need you so, so much right now. If you leave the company ASAP, which might inspire others to leave, then the acquiring company's entire investment in buying the company is at risk.



So:

If you're the main person working on the transition, you have a few good reasons to be leading 1-3 meetings with decision makers in the new company as well as to have the actual contract your boss will sign / has signed. You'll know specifics, and if you and the boss are in the meeting together, he can hear you ask revelatory questions and hear their answers.

Revelatory questions like, "I've heard you've left X company in [state] alone for about a year so far, but I'd expect a successful upper management team to somehow assure that an acquisition was optimized, especially in the absence of the founders who made the smaller company successful in the first place. When do you expect to have owned it long enough to start more actively managing? What are the metrics you'd optimise for? How have you optimised/interveneed in the past?"

And: "Naturally everyone in the company will be terrified that they'll lose their jobs. Does this contract have any provisions about that?" or "How about a contractual stipulation that the company will be left alone with no mention of management, personnel, policy, or oversight changes for three years or something? To avoid not only massive personnel exits but also the distraction of very real external pressure while we go through the difficult adjustment of this change and life without our original owner?"

And: "Our original owner of course does a lot in the company. How will that work be replaced and by whom? How will their management techniques and ways of working and, importantly, communication compare to his?"

And, as you become more comfortable talking with their team, "It's completely normal for an acquiring company to do a lot of layoffs after a certain period of time. How are you different, and what can you point to in writing to persuade our intelligent well-informed staff that this is a real difference rather than just the standard thing any acquiring company would say to avoid immediate mass quitting by the most qualified staff?"

Think of your own.

Also: They will really, really need you at first. You're going to be irreplaceable until someone in their company learns what they can only learn by interacting with you and the staff for a number of months. Then you'll likely be very replaceable. This probably applies to some other key staff too. Keep that in mind when negotiating your contract next time.

So: Whatever "in writing" provisions might offer substantial protection and aren't there in the contract your boss signed, you might be able to put them (in nuanced form that gives reasonable protection to the new company) into your own individual contracts. Not just "don't fire me" but "don't make it unbearable to work here and don't do things that are so bad for the other workers that I find it completely depressing to work here -- but yes, I get that you'll need to make changes and the adjustment won't be friction free."



As for your possibly-undocumented coworkers: Bring this up as a rumor about one or two well-liked people with family responsibilities, and that it's something you'll need to address with the rest of the staff (so that this isn't about you personally, knowingly breaking any laws but about maintaining morale in a very understandable company culture and again avoiding mass quitting). Be clear that you would never ask anyone to break any laws, but that the main goal is to avoid knowingly putting beloved (but unknown to you) coworkers in the position of leaving their families, being detained, or being deported, or being mistreated in any way -- and that, of course, that love and very positive company culture is something that needs to be protected separately and as much as protecting the company legally.

Come prepared with some good proactive suggestions for how to handle this and other sticky questions.

Maybe do some searching for strategies that have worked for other acquiring companies.



Good luck. Schedule more than one of these meetings and possibly have a topic list for each meeting.


You'll never again have this much power, so use it wisely.
posted by amtho at 8:21 AM on January 23 [2 favorites]

Depending on the PE firm and the nature of the target, cutting costs ranges from 0% to maybe 25% of the purchaser's strategy to increase earnings. It is extremely rare that PE companies will acquire a company so poorly managed that it would have so inflated a cost basis as to make bigger cuts worthwhile.

I've never met a PE investor who was opposed to immigrant labor. In most PE firms, immigrants and their kids are a large share of the professionals. They want the best workforce at the lowest cost and that's, as a general matter, going to lead to a pro-immigrant stance. Lower-middle-market PE (which this sounds like) does have a stream of back-office process improvement in its strategy and if your company is flagrantly non-compliant with hiring rules, that might get fixed - but if you have some staff who presented documents that passed a reasonably I-9 review and there aren't a bunch of no-match letters sitting in someone's drawer, PE owners aren't going to be doing some kind of aggressive audit of eligibility calculated to oust long-term employees.
posted by MattD at 11:00 AM on January 23 [1 favorite]

Keep your head down, accept that it's a done deal.
The transitional period, whether its 6 months or 18 months, is a precarious time.

(he is staying on as CEO).
But for how long? It might be for a much shorter time than you or he thinks.
The transition from owner to employee can be a tough one for him to navigate.
To have to justify decisions to someone else, to ask permissions etc.

You know where the bodies are buried.
This can actually be a negative for you.
You know whose idiot nephew screwed up, who pissed off a major client, , who cut corners, turns a blind eye to things etc
There are people who would prefer that knowledge not get to the new owners.
Better for them if that knowledge left with you.

Don't rock the boat. Try to survive the transition
See what happens. It may be an improvement.
posted by yyz at 12:52 PM on January 23

I work for a company that was acquired by a PE firm a few years ago. When I initially heard the news I had the same strongly negative reaction that you did, but the experience been more neutral in practice.

Private equity firms seek returns from their investments in various ways. Sometimes that looks like draining all the value out of a company and leaving the dried-out corpse behind. In other cases that can in fact look like "helping the company grow" as part of a long term plan to sell it to another owner or to list it in an IPO. In those cases drastic layoffs or disruptive business changes are less likely, especially soon after the acquisition, because the company is expected to continue regular operations.

What I have seen the PE owners bring is a laser focus on growing revenue and cutting costs to support their (probably) 5-10 year timeline. Some of the resulting changes have been positive, others less so. The "growing revenue" part has come from investment in our existing product lines plus acquisition of additional smaller companies. The "cutting costs" part has come from improved leadership and processes, prioritizing cost-savings work over other aspects of product development, shifting hiring to lower-cost regions and yes, by reducing headcount. As with any company, staff in non-revenue generating functions are more vulnerable but reductions will be made wherever they think it supports their financial goals.

So no, your job may not be safe but let's be honest, it's unsafe regardless of the private equity acquisition. Sorry. Both public and private companies in my own field have made significant staffing cuts in the past couple of years because that's what the market conditions favor. The most cold-blooded, corporate-raider style takeover I've ever seen in my career came from one giant public company buying out another smaller but still huge public company in the same industry. The PE experience has not been that bad.

What do you do? Don't panic. Don't break your NDA. Do some research on this firm and how they manage the companies in their portfolio. Think about how to convey the value you (and your staff and coworkers) will bring to the new owners. If you're in a position to negotiate retention and/or severance agreements try to do so. And update your resume, just in case.
posted by 4rtemis at 2:12 PM on January 23

I've been there; "Things won't change much" turned in to "You have 5 plants worth of capacity and 4 plants worth of customers". Musical chairs ensued.

Prepare for the worst, be thankful for those plans you don't need.
posted by achrise at 4:34 PM on January 23

I see a lot of cowardice in some of these responses.

You have a ton of power right now, wield it. Proactively strengthen you position through direct action. Negotiate HARD.

You have so much power RIGHT NOW.

Feel the fear and do it anyway.
posted by MichaelJoelHall at 4:34 AM on January 24