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Thursday, June 27, 2019 2 comments

Adventures of a #techcomm Geek: A Cautionary Tale of an Acquisition

Pull up a chair, young’uns. Today, I bring you a tale from a time when years started with a 1. It was a technologically backward time, before email had yet to completely replace paper memos and USENET or BBSes were how most people “went online.” But the technology we had, we used well. It didn’t require LinkedIn to help empty out an office when things went to #3||.

The 80s were in our rearview, although its music lives on to this day, and the corporate merger and acquisition binge was starting to cool off. Still, buying and selling is the lifeblood of a corporation, and sometimes what they sell is pieces of themselves. So, on to this particular place. None of the players are around anymore, so let’s call it Don’t Care Anymore (DCA). It was a “coulda been” company—I’ve worked at a couple of them. DCA, with some vision and luck, coulda been Cisco. The founder held the (now expired) patent for statistical multiplexing, and they did good business building and selling serial port multiplexers. (Remember, this was a technologically backward time, when some people still had serial terminals on their desks).

But even then, Ethernet was beginning to worm its way out of the server rooms and developer offices, and into the office as a whole. There were competing networking technologies, most notably Token Ring (mainly in IBM shops), and Ethernet at the time required relatively expensive coaxial cable. Many companies still thought serial terminals connected to a VAX or IBM mainframe were adequate; some had PCs for word processing and spreadsheet software (“Lotus 1-2-3,” look it up, kiddies), but the PCs still had a serial connection. You see, networking applications like email, file sharing, and (for forward-looking companies) USENET were things that ran on mainframes.

There were some good ideas going on—the serial concentrators got an Ethernet card, and DCA bought a company making a T-1 transceiver (basically a really high-speed modem that could carry data, voice calls, or any combination). The developers were also working on what amounted to an Internet router. Had executive management given it more focus, things might have been different… but what they called “networking” was only one part of the company, and the execs considered it the unimportant (if original) part. They were focused on selling a hardware/software combo that allowed a PC to emulate an IBM3270 terminal. It was an amazingly high-margin product for the PC market, and the execs had little headspace for anything up-and-coming (despite handwriting on the wall, like a declining market for IBM mainframes and chipsets that would slash the cost of the hardware component to nearly nothing).

So, the execs found a buyer, and sold the networking division to another company. Let’s call that outfit Really-Moronic (R-M), for reasons that shall soon become obvious. Long story short: there was a lot of goodwill on our part, because we felt like we were actually wanted, and they threw it down a rathole.

You see, DCA had a pretty decent benefits package. The Boy and Daughter Dearest were both born when I worked there. Wife-unit was working as well, and her benefits were on par with mine. The upshot was, “childbirth” was covered at 80% for each of us. So one package picked up 80% of the bills, and the other got 80% of the remaining 20%… which meant a $10,000 hospital bill became $400 out of pocket.

It was a good thing we had our kids before the acquisition. R-M’s healthcare package, compared to DCA’s, was terrible. I ran the numbers, and it amounted to a 7% pay cut. It didn’t help that R-M’s VP of HR (are we choking on the acronyms yet?) both misled and outright lied to us about the benefits:

  • We got yearly bonuses at DCA. When asked about that, he replied “Sure, I get a bonus.” He neglected to mention that only management got bonuses. Deliberately misleading. So on top of the 7% pay cut on the healthcare front, we lost a bonus averaging another 7% per year.
  • Asked about the healthcare package, he replied “it’s comparable to yours.” An outright lie, unless he meant “our package looks terrible by comparison,” or management had a better package.
  • They moved our office to Dunwoody, claiming it was a more central location—another lie, they chose the office to avoid building out a computer room. One of the things people liked about DCA was that exurbia had little traffic. It was an easy commute. People moved nearby to take advantage of low(er) housing costs. Dunwoody added a good half-hour or more to the commute time, each way. We shared a high-rise with a couple other companies, including AT&T. Ma Bell’s kids were really nice people, who invited us to their company BBQs and the like. Having good corporate neighbors took some of the edge off the relocation, but certainly not enough to make up for the increased commute time.

The benefits disparity had to come up during the due diligence that any company has to do when they’re buying another company (or a large part of one). Did R-M think that people would just shrug and take a pay cut on top of the overt disrespect, especially the highly-talented engineers and support staff who do the magic that makes a tech company profitable? Did they really believe that skills aren’t transferable? Or were they so arrogant that they thought it wouldn’t matter?

A round of layoffs hit. One manager, told he had to cut one person in his department, laid himself off. After that, no layoffs were needed; the talent started draining out the door. R-M made a few half-hearted efforts to stem the outflow, paying out a token one-time bonus and hiking the raises to cover some of the difference in the benefits packages. But we were still taking a significant pay cut for a longer commute, and word got back that the new owners considered us “losers and whiners.” That, as you might imagine, did nothing positive on the goodwill front.

Our boss was the first of the documentation department to depart. The new boss was several hours away (by plane), which meant we mostly managed our own affairs. We became Resume Central for the rest of the office, in between our own job hunts and departures. After a few months of searching, I hooked up with a reputable contract house and spent about a year bouncing around from place to place. R-M sank like a stone, and nobody remembers them. Ironically, the parent company retooled and is an important customer of the place I work at now. DCA also disappeared, bought by a competitor who did a better job of understanding the changing landscape.

Moral of the story: employees aren't stupid. They recognize a significant pay cut when it happens, and they recognize a lack of respect. Combine that with a robust tech job market, and you might find money you spent on that big acquisition going down the drain… and taking you (and your CEO’s reputation) with it.


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