You could argue that the only thing worse than waiting for the deal to close after you’ve been told your company is going to be sold is to hear that the deal; a) might not happen, b) might happen with someone else, or c) might happen but you’d still be partnered with the company that owns you.
Such is the fate of people at San Francisco-based exchange traded fund company iShares, as well as their parent firm, Barclays Global Investors, the world’s largest asset managment company. BGI, in turn, is owned by London-based Barclays PLC. As noted in an earlier post, the waiting game continues over what will happen with iShares and BGI .
Originally Barclays announced that iShares had been sold to UK headquartered CVC Partners. But other potential buyers have emerged during a 45 day “go shop” period, jeopardizing the deal . In addition, Barclays may now sell the iShares parent BGI firm as part of the deal. [Update : See CVC Bid for iShares Trumped by Potential BGI Sale ] [Update 2 : Also see iShares Should be Sold, not BGI — BGI is the “Beating Heart “]
So what difference does this make?
For people at Barclays, probably not much, though some senior managers at Barclays may end up with as much as $15.7 million from the sale.
For people at BGI and / or iShares, it may mean a lot.
If a private equity firm buys iShares or BGI with iShares, the only big change will likely be that the new entity has a new owner, and some added pressure to make money to help the new owner pay for the deal. Pared costs and reduced operating expenses, including lay-offs are not uncommon in such situations.
If iShares or BGI with iShares is sold to an existing firm such as BlackRock or Bank of New York – Mellon, then lay-offs may hit the combined unit. In such a combination – though it’s always possible to operate as a standalone – the more common pattern is to merge departments that are similar to reduce redundancies. In such a case, two heads of HR become one, two heads of trading, two CFOs, two heads of sales, two heads of Technology become one, etc., all the way down the food chain.
BNY-Mellon’s institutional asset management firm is based in San Francisco, and literally across the street from BGI’s former headquarter’s building. Mellon’s firm is smaller than BGI, which might be interesting to see which firm ends up as the prevailing culture in the merged unit.
BlackRock is based in New York, which might add some geographic complexity to the integration.
In both the BlackRock and Mellon cases, redundancies exist, and will likely be taken care of in the form of staff reductions at some point.
While the poor financial services market means some employees will feel locked down into their jobs, others who have portability – for example IT people who can take their IT skills to non-financial service companies – may be inclined to leave now rather than be layed off later.
So what’s next?
This deal for either iShares and / or BGI looks like it will take a time to play out – June 18th is one date reported for Barclays to act . In the meantime, employees will continue waiting – and my guess is revisting their resumes to make sure they are up to date.