I want to get back to what happened to the AFC folks inside of Tellabs. This is an important part of the story and makes what happened later more understandable.
There was a typical exit of those G&A functions. Some were immediate like John Schofield and Keith Pratt. Others left over a few months. This was visible to me because these functions were located outside my office. By 6 months after the takeover, I could have put a bowling alley in the area in front of my office. There were a lot of empty cubicles and offices.
Beyond that, this was a big deal for both sides. Tellabs had bought some existing firms in Europe. They had bought some startups in the US. AFC was immediately about 1/3 of the total new Tellabs. This was a very different purchase for Tellabs and was a bit threatening to some folks in Chicago.
Now AFC had put together a “retention program” for key personnel. These folks were listed by name in a document that was part of the deal. It seemed that most of these folks were gone very quickly. Some of this was because they did not want to be part of Tellabs. Some of it was that the way they were integrated showed them the door. This created a huge brain drain on the top talent at AFC.
Both Jeff Rosen and Victoria Perrault moved to Naperville to take over Operations and Human Resources respectively. They were both out of Tellabs within months. Jorge Valdes was the Executive who lasted the longest other than myself. He lasted less than a year.
What happened was that outside of the Product Group (Development, Product Marketing, Product Management) people went to work for their Tellabs counterparts. In general, they let soon afterwards. The Product Group was then transitioned to the leadership of Rich Schroder. Rich had been running just the Marconi Access Team in Texas. He was a former colleague of Carl DeWilde deep in the past.
So suddenly less than a year of the purchase of AFC the people that had beaten Alcatel were essentially all gone (with me as the exception). This group was replaced by the people that had run the Marconi Access Team that (outside of BellSouth) had lost all of its market share. I am pretty sure that this did not make a lot of sense if somebody took a step back. But nobody did.
Why is this relevant to you in your business? You need to think about your people as the key to your business. AFC was not just its leadership, it was 1,000 people that made it what it was. If you get rid of the people, you are essentially killing the business. This is why M&A is so tough!
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Lunch and Learn – February 2013