The People You Lose in M&A: Key Talent Retention Before Close

Four Criteria for Deciding What to Pursue

The strongest foundation you can build is a partnership with your products and engineering organization. Commvault is a strategic technology company. We're not a banker or consulting firm bringing acquisitions from the outside. What we're after is the strategic story we can tell our customers. 

The first and most important thing is building relationships with product and engineering, understanding their product roadmap, identifying the gaps, understanding what the strategic rationale would be, and being part of their buy-versus-build-versus-partner conversations.

The second is having a solid view on the market. Understanding which companies are in your space or in strategic adjacencies you're considering from an acquisition, partnership, or investment perspective.

Third is building the target pipeline from that view. Thinking about companies across different angles, large, medium, small, across various strategic areas that could matter to your organization. 

Fourth is relationships across the broader organization. Not just product, but sales, finance, and the executives and operators who will actually be responsible for integration. You need to have the pulse on where the company is going, what customers are thinking, what technologies are relevant. Especially now with AI, technology is changing so fast. How you stay current through those relationships, through customer conversations, that's critical.

Those are the four criteria: product and engineering alignment, industry perspective, the right target pipeline, and organization-wide relationships to make it work.

How Commvault Evaluates Every Deal 

The criteria depends on three things: the technology story, the financial story, and the culture you'll be able to build with the organization. Some of it is quantitative, a lot of it is qualitative.

Technology: sit with your product and engineering team, sit with sales, understand where the organization is going.

Financial: what you can afford, what multiples you're looking for, what the valuation criteria would be, how the P&L is going to look as a combined organization. Being a publicly traded company, the guidance we've given to the market is important. We need to acquire companies that either fit within that framework or that we can evaluate from multiple financial angles.

Culture: can that organization align culturally with ours? You can't fully assess it from the outside, but you can get signals. You can learn from conversations about the employees, about the reputation of the organization, and depending on size, whether it can fit into yours or whether you can absorb them.

Why the Acquisition Story Has to Run Smoothly

Buy, build, and partner conversations all happen in parallel. You can't approach it as one or the other.

Within your own space there's usually a consolidation angle, or a small technology gap you're filling through acquisition. And then there are strategic adjacencies. One thing I'm very careful about is whether the adjacency story connects cleanly. Commvault is a data protection company. 

When I look at an adjacent acquisition, I'm asking: when we go to market and explain why we bought this company, does the story run smoothly? Does it click with customers? Can we tell it to investors and shareholders without a gap in the middle?

We've tested theories with analysts, with bankers, even with customers, without going into exact detail, just pressure-testing how it would be perceived. Getting that external perspective on the strategic rationale is important, whether it's a core space play or an adjacency.

My favorite deals are adjacencies. They give you an opportunity to expand TAM, open up new customer sets, and increase cross-sell potential. Customers benefit from a vendor that provides multiple solutions in the space.

Seller Conversations and the Buyer-Led Approach

In Buyer-Led M&A, the conversation with founders can't start with cost savings. It needs to start with common ground: where can customers of both organizations benefit from having these solutions together?

You go with a thesis, but you build the story together. You hear their perspective from the other side, and you develop something comprehensive out of those conversations. The two teams coming together to tell a full story is what matters.

Cold outreach is something we've done, through LinkedIn or common connections. I never open a message saying "I'm interested in acquiring your company." It needs to be framed as a win for both sides, a partnership angle.

 The M&A conversation sometimes doesn't even come up in the first call. There are follow-up conversations. You bring in product people, continue telling the story, and sometimes something clicks. 

The path we're on aligns really well, so why don't we do something together? It can expand from a partnership conversation to an investment to a full acquisition. Sometimes it takes longer, sometimes it's quicker.

AI Valuation Inflation and Expectation Resets

The financial profile of a combined organization is the starting point. Deal size shapes everything: a technology tuck-in comes with a small customer base, limited revenue, and a straightforward cost profile. Medium or large acquisitions can be transformative, and the combined P&L has to make sense for investors and shareholders.

From a valuation standpoint, we look at revenue and EBITDA multiples relative to our own. Is the target at the same multiple, lower, or higher? Then we layer in the industry. Different sectors carry different multiple expectations, and right now AI is the most distorted example of that.

I've talked to a lot of CEOs running companies that have an idea on a piece of paper and very high valuation expectations. Some have a little revenue, a few customers, and even higher expectations. 

What I've seen happen repeatedly is a company pivots from what they were doing before to building on AI, prices itself accordingly, and then discovers there are a limited number of buyers. 

Companies I had conversations with six months ago at one expectation are reaching back out now at a different number, sometimes with a more developed product vision, sometimes just with reset expectations. They're still finding their place.

The three financial lenses: combined P&L profile, valuation multiples relative to ours, and industry-adjusted valuation context.

The TRUST Framework for Culture

Culture is a word everyone is trying to define, and we've struggled with it too. Culture is not about HR policies. It's about how decisions are made, especially under pressure.

At Commvault, corporate development is part of an organization called Corporate Trust, which includes business development, security, legal, and compliance. TRUST is very important to me, and I developed an acronym for it.

T: Transparency. Being transparent from your very first conversation with a founder, about your intentions, your strategic story, and how you're communicating to the rest of the organization throughout the process.

R: Relationships. The relationships you build throughout the deal, starting with founders, expanding to everyone involved in diligence, and continuing after close.

U: Unified leadership. Making sure your entire leadership is aligned, and that the leadership of the company you're acquiring is also aligned on the story. We start with our M&A committee, which includes the CFO, CEO, and others, then expand those conversations out to the rest of the leadership team.

S: Signals. Every signal matters. How people react during diligence conversations, what story the other person is telling you, every observation, every word. Catch them all.

T: Talent. The culture story aligns with the talent you're bringing in. Being a strategic company, the engineers, product people, and the broader team you're acquiring matter enormously. Look at the talent not as assets being acquired but as humans going through a significant change.

When Unified Leadership Breaks Down

I can think of one story from years back where unified leadership was the thing that broke down. It was very much like a merger of equals, and there wasn't alignment on the story or the strategic rationale at either leadership team. We proceeded with the acquisition and started integration, and the politics and friction were visible immediately, not just at the top but at the middle management level. People got protective about their processes, their work. The friction continued to get worse over time.

When there's a lack of alignment at the top, the same fragmented message filters down through both organizations. You keep seeing friction points, things breaking.

The hardest part was that I could see it from the very first integration governance conversation. There was misalignment on how the integration management office would run. That was the signal. If there's no unified message, no unified leadership, human connections will break, and everything follows from there: processes, tools, relationships.

How to Read Culture Before You Meet the Employees

There's a comment I hear sometimes inside organizations: acquired employees are just new hires. They'll follow the IT policy, the HR policy, the email retention policies. What's so different about bringing twenty people in? 

The difference is new hires chose to join. They researched the company, understood the culture, and made a decision. Acquired employees probably found out about the deal through a press release a few hours ago. They don't know you, they don't know the strategic rationale, and they don't know what the combined company actually looks like. 

That gap requires sensitivity. Put yourself in those shoes before you start enforcing policies.

I had a specific conversation with IT about an email retention cutoff, everything before a certain date would be deleted. I pushed to give the acquired team more lead time and more context on why. It's the same new hire versus acquired person dynamic: you just need to be slightly more sensitive, and give them time to stabilize.

On the culture diligence side, I work through three things before LOI:

First, the founder connection. From the first conversation: can I imagine being a colleague of this person? Can they imagine the same of the people on our side? That's the first read. 

Second, how founders talk about their employees. Not about the product, not about the financials. About the people who actually built the organization. That tells you a lot about how they operate and how they think about their team. 

Third, common connections and publicly available information. Former employees, Glassdoor reviews, common connections who can give you an honest picture of what working there is actually like.

All three are first-tier diligence. You can run them in parallel before LOI.

Why Retention Planning Has to Start Before LOI 

After LOI, the diligence goes employee by employee where possible. Not treating people as an Excel line item, not framing it as synergy opportunities. Going person by person: what does this person do, what do they contribute to the product organization, what role will they play post-close? 

You might say it’s difficult. For smaller tuck-ins, going through twenty or thirty employees is straightforward. For larger organizations where employee-by-employee diligence isn't practical, do it at the functional level. But do it at some level of granularity. 

I picked this philosophy up at a conference and I'll credit it directly: pocket is not the most important thing. The order is heart, brain, then pocket. Win their hearts through your actions. Tell the story that convinces them to believe in the combined organization. Then get to the financial incentives, retention bonuses, salary rationalization, whatever that looks like. All three matter, but that sequence matters too. 

Culture is a difficult word that can't be fully defined at any one point. What you get changes at every stage. Before LOI it's high-level, a founder read. After LOI you're going deeper, getting signals at an employee or functional level. After you sign and announce, you're in day one events and the first integration conversations. Post-close, you're in the full reality of integration activities.

The information you get at each stage is different, but it has to be built on a strong foundation. That foundation starts with knowing what the talent is going to be doing post-integration, and sharing that plan early to the team. 

Some acquisitions are primarily a customer acquisition play. Some are filling a technology gap where talent is the whole point. Some involve consolidation. Whatever the shape of the deal, tell your story first, before you engage with employees, so there's a level of transparency and trust already built. Don't leave people guessing about what the intentions are for the combined team.

Heart, Brain, Pocket and Why the Order Matters For Retention

The retention framework is heart, mind, and financial.

Heart is through your actions. Everything you do is going to be judged very closely, whether that is a day one event, who is attending, what we are talking about, what the all-hands conversation is going to be, how transparent we are, whether the intentions coming across are honest. Every action, every word you choose, is going to help you win those hearts.

The second is the mind,  the better-together story and how convincingly you are telling it. Not just the deal thesis you built, but actually believing it, and convincing people to be a partner in that journey with you.

The third is financial. Sometimes you have to do salary rationalization:  understanding where they are from a compensation perspective versus where your organization is, and what changes need to be made. What does the retention package look like? Is it cash retention or equity retention? What are the earn-outs for founders? 

All of those things matter. But they are interconnected. I had a situation where we had a retention plan in place for the team, and there was a delay, not by anyone's mistake, just a coincidence in how payroll was being processed for some of those employees. That delay created an impression that was not necessarily positive. 

We had done the work to win hearts, and a payroll timing issue created a negative optic that was hard to walk back. Every action in those early days, especially the operational ones, is being judged by the acquired employees.

I have been in both shoes. I have acquired companies, and I have been acquired. When I was on the acquired side, I had the same set of impressions about the other organization. You need to be very critical and on top of everything you are providing to employees in those first months.

Why Financial Incentives Alone Will Fail

The deal thesis falls apart. In a strategic technology company, what that means practically is key people leaving and the team spending all their energy solving attrition problems instead of executing the product roadmap you acquired them for.

You cannot over-pivot on one thing. You cannot say financial incentives do not matter because you have already won the hearts and minds of people. And you cannot say the story does not matter because you have given enough money. 

There is a balance you need to find, and sometimes you need to put more emphasis on one thing over the other, but you cannot skip any of them.

If you give a one-year retention package and that is the whole strategy, you can guarantee that person leaves on month thirteen. The purpose of doing all of this is long-term retention, not a contractual countdown.

Structuring Retention by Person

It starts with a direct conversation with founders: what is going to get them excited about this deal, from a financial perspective, from a story perspective, from a heart perspective. 

Then you ask those founders about their employees. Getting their direct feedback: what gets this person excited? What is challenging for them right now? What did they ask for in their last performance review? Those answers give you a full picture.

I have a specific set of interview questions I use when doing employee-by-employee analysis. Getting those signals gives you the full color on what each person needs.

And then be flexible. You may build a retention plan during diligence and then close the deal and find things you were not considering because they did not come up in those conversations. Post-acquisition it becomes harder because you get into processes and policies and the pace changes. 

Finding exceptions, putting yourself in their shoes, staying empathetic, that agility post-acquisition is very critical. You need a strong view going in and the flexibility to adjust after you close.

Why the Deal Team Should Own Integration

What I have always valued in my experience across all three companies is being involved on both sides, the acquisition and the integration, as the same team, the same person leading both.

The reason that matters is accountability. When you are building the business case as a deal person and writing in assumptions about IT savings, tool rationalizations, headcount, you are going to be the one responsible for implementing those in the post-merger integration phase. If you do not feel confident you can actually get it done, then the Excel math is already wrong.

Every assumption, every Excel formula in a business case needs an operational plan behind it. Sometimes it is detailed, sometimes it is high level, but at minimum there should be a conversation that makes each assumption practically possible. We have failed at this too. There were assumptions we made that we later found out could not be implemented the way we planned. But having that foundation means you are adjusting from something solid rather than starting from scratch.

As the IMO leader, the role is bringing the rest of the organization along, telling the story to teams who were not in diligence, communicating, keeping the north star visible, coordinating across functions, and providing fast decision-making where it matters. 

You are sitting in the middle of conversations between finance, IT, product, and engineering, teams that are not necessarily hearing from each other. You are the common connection. You connect those dots and help each team understand the implications of their decisions on the broader integration story.

I like to be detailed and have a plan behind every assumption we are making. I like to feel confident in those. But this is not to say that you can have answers to all thousand different pieces of the puzzle you are trying to tie together. If you have a strong foundation, you can build on top of it, and you will have the ability to be flexible when things require changes.

That engineering mindset, the analytical mindset, the project management mindset, having visibility into how the product organization works, having worked in the financial domain, and of course the MBA experience,  all of those things, just having the appreciation of how different pieces of this puzzle work, is very important.

Relationships Over Processes in Integration

Relationships open doors. Processes and policies do not. You need to phone a friend in different functions to get a perspective, to brainstorm. 

I always approach those conversations by saying: I do not think I have an answer, but I want to be creative and I want to be collaborative. Help me think this through and I will help you think this through. Together we will come out of this conversation with a solution that may be workable. And if not, we will be creative and collaborative in adjusting it.

Relationships have always been very important in acquisitions and integration. Corp dev sits in the middle with a neutral perspective that is genuinely useful. That is why being in corp dev has sometimes put me in strategic initiatives across the organization that have nothing to do with an M&A project: a transformation project, corporate strategy work. 

You have the exposure, the relationships, and the neutral perspective to hear something from the product, hear something different from sales, bring both people together, and come up with a plan that works for both teams and for customers. That is a remarkable place to be.

How Commvault Uses Minority Investments Without a Venture Arm

We don't have a formal venture arm. These are opportunistic investments.

Sometimes it is a foot in the door. The other company may not be in a place where they are thinking about an acquisition. An investment puts both teams in a position to test the thesis first, work together, and learn more about each other in a different kind of relationship: an investment and partnership relationship. Over time you learn from it, and you may still go through an acquisition, but you will have a more comprehensive perspective on the better-together story.

Other times, acquiring the company just does not make sense for either side, and that has been clear from the beginning. There is no acquisition intention, but there are co-build, co-market, or co-launch opportunities worth exploring, and an investment enables those.

And then there are investments where we simply want to know more about the industry and the market. We want to look at the high-performing startups and be part of their journey, whether an acquisition is in the plan or not, whether it leads to any co-build or co-launch opportunities or not. Just knowing that team, knowing that space, knowing that market is going to be helpful for both organizations.

We have not been a formal venture arm. It is more opportunistic. And my first LinkedIn outreach sometimes genuinely is "let's explore" and it is honest, because we may go in thinking of M&A and both teams come out deciding that investment makes more sense. So when we say "let's explore," that is a transparent reach-out, not a setup.

Preserving Culture After Close

A colleague of mine used to always ask: what is the secret sauce of the company you are looking at? Knowing that in diligence is very important, but maintaining it is even more important.

Culture is a word that is not always well defined, but the deal value is lost if you are not careful and deliberate about it. It is sometimes a cliche, using fancy words to convince the other side. But what made them successful needs to be retained. This is not to say that things will not change when an organization is acquired or absorbed by a larger one. Things will change. But what made them successful needs to be retained.

Early Warning Signs in Diligence

Every observation, every conversation, every word the other person uses will give you signs. Sometimes as deal people we have a tendency to ignore those signals because we are in deal fever and we want to get it done. But those signals, those intentions, leaders talking badly about their own employees, for example. Those are important and you cannot ignore them. I have ignored some of those. They were right. Your gut feeling is always right, and you should not be ignoring it.

What Breaks First at High Deal Volume

Depth breaks first at a high deal volume. When you are looking at a variety of acquisitions, the depth in your observation, the depth in your diligence, the depth in your integration plan may get lost. And not just in corp dev,  in your overall organization as a whole. It comes down to quality versus quantity.

Walking Away From a Deal Post-LOI

Walking away from a deal is not easy. Sometimes you are too far in the process, you have spent so much time, you have sold the story to many people in the organization, to your board, to the founders, and then you find things that are not workable, and you may be tempted to ignore some of those.

There was one deal where we worked with a founder who we later found out was in competition with his family. 

Many people in his family had been billionaires, very successful, and the reason he was building an organization and a team was driven more by that competition, by the incentive to be at par with those around him, than by actually thinking about his employees. 

When we dug deeper, when we learned more about the employees and the attention management had actually been paying to the organization, it was not something that was going to work for us. We decided to walk away.

The cultural signals were there earlier than we acknowledged them. Your gut is usually right.

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