When does the acquirer company replace the target management?

Hi Fahad, I think that the target’s management should not always be changed. You could keep the executive team and perhaps send one general manager from overseas to integrate the company.
In my opinion, the key positions that need to be well supervised by the acquirer are finance, sales, and hr. Again, this does not necessarily mean to change management but for sure to keep a close look and develop key relationships also with the second line of management.

Great question.

Timing and prioritization are key when considering management changes in an overseas acquisition. The timing for management changes generally depends on the specific circumstances and goals of the acquisition, such as cultural alignment, performance metrics, or strategic vision. That said, changes at the senior management level (e.g. CEO, COO, CFO) usually come first because these roles are critical for setting the direction and tone of the newly integrated entity. These changes often occur within the first few months post-acquisition, to help establish authority, ensure alignment, and kickstart integration efforts. Making changes too late could prolong the transition period and create uncertainty, but making them too early might disrupt operations if not done thoughtfully. Local cultural factors should, of course, be considered carefully in an overseas context, since leadership changes can have different impacts depending on cultural expectations and business practices.

It all depends on the vision and financial incentives. Contracts are signed with key management positions until certain objectives are met before they can move on.

There are some great points that everyone has pointed out. I agree that there should not be a drastic change right away, that will kill culture and morale. The acquirer should include an employee retention clause and bonus in the SPA to keep things status quo until you find the right organizational structure to meet your goals.

The decision to replace a target company’s management should be made on a case by case bases. I agree with many of the statements above and would add that for many organizations, a C level role is brought in specifically to get a target company ready for acquisition. In that case, their role and goals may be met once the acquisition takes place and instead of aggressive change or scale that the leader may have specifically been brought in to achieve, the new goal is around stability and integration, which could benefit by having someone form the acquiring company step in. Depending on the type of organization and its goals, a shift in the C level is intended to drive change. According to a PWC study from 2018, “The study, which analyzed CEO successions at the world’s largest 2,500 public companies over the past 19 years reports that while the median tenure of a CEO has been five years, 19 percent of all CEOs remain in position for 10 or more years, consistently, over the time period analyzed.” So perhaps an acquirer should consider a level or two down in terms of which talent is required to stabilize and realize synergies and which are not.
https://www.pwc.com/gx/en/news-room/press-releases/2019/ceo-turnover-record-high.html#:~:text=The%20study%2C%20which%20analyzed%20CEO,over%20the%20time%20period%20analyzed.