Acquiring Labor

We present evidence that some firms pursue mergers with an objective of acquiring and retaining the target firm’s employees. We identify such target firms by the language used to describe employees in their 10-K statements, focusing on references to “skilled” employees. We find a positive correlation between the use of the word “skilled” and post-merger employment outcomes. Moreover, we find that it is the target employees most valuable to the firm that are relatively more likely to be retained following an acquiring-labor-motivated acquisition. Acquirers appear to retain the high value employees in acquiring-labor-motivated acquisitions by providing these workers with relatively greater wage increases.