The Value of Employee Morale in Mergers and Acquisitions : Evidence from Glassdoor

In this paper, I define employee morale as employees’ attitudes toward and perceptions of the tasks employees have in the companies they work for and various firm dynamics. I explore how employee morale affects merger probability, post-merger value, performance, integration, and merged firm employee morale using various proxies. The paper makes several novel findings. Firms with similar employee morale are more likely to merge, achieve greater short-run and long-run post-merger synergies, perform greater takeover restructurings, and exhibit a higher likelihood of completion and rate of completion. Firms with similar morale achieve better post-merger integration than those with dissimilar morale. The high morale of target employees enhances post-merger morale and subsequently enhances performance of the acquiring company. This finding points to the transmission of target employees’ morale to acquirer employees’ morale as a channel of improved performance. I find that acquiring companies value the employee morale profile of target companies and that they bid for target companies with high morale