When a small business changes ownership, most conversations center around the numbers: valuation, cash flow, margins, and synergies. But very few acquisition models account for the asset that is most likely to walk out the door and take your growth with it. That asset is your people.

We see it time and time again: the deal closes, leadership transitions, and within 30 to 90 days, high-performing employees begin to disengage, or worse, resign. And when your top contributors leave, they do more than create a hiring problem. They create a revenue problem. A customer retention problem. A culture problem. And in many cases, an operational crisis.

Patrick O’Connell, calls this the "Million Dollar People Problem". But truthfully, for some businesses, that number is a floor, not a ceiling.

What Is the Real Cost of Losing a Top Performer?

The replacement cost of an employee is not just about salary. It includes:

• Recruiting and onboarding expenses

• Time lost during hiring and training

• Missed revenue during ramp-up

• Customer churn tied to that employee’s relationships

• Decreased morale and productivity across the team

• Strategic drift when institutional knowledge is lost

A commonly cited figure is that replacing an employee costs between 50 and 200 percent of their annual salary. For average employees, this might be accurate. But for your top producers, the people who are directly responsible for revenue or operational success, the cost is significantly higher.

In our client work, we routinely see a 2 to 3 times multiplier for high-performing employees. These are the people with deep customer relationships, unmatched institutional knowledge, and an outsized role in driving results.

Let’s consider three real-world examples.

These insights come from Patrick O’Connell, Founder and Managing Director of O’Connell Advisory Group. Patrick has led over 150 business acquisitions and exits in the lower middle market, totaling more than $950 million in transaction value. With deep experience in both buy- and sell-side advisory, post-merger integration, and deal readiness, Patrick brings a unique, operator-informed perspective to what makes or breaks an acquisition.

• Tori, an acquisition entrepreneur, discovered during diligence that losing just one key sales employee would cost $100,000 in hard expenses and potentially up to $250,000 in revenue loss.

• John, a limited partner in a manufacturing SMB, estimated that retaining a single top employee post-acquisition protected at least $1 million in earnings and saved $250,000 in avoidable turnover costs.

• Robert, an owner in the trades, reflected that investing $200,000 in retention could have prevented what ultimately became a multi-year revenue slide worth two to three times that amount.

These are not theoretical. These are owners and operators sharing painful, tangible outcomes.

Why Do Top Performers Leave After Acquisitions?

Here are four consistent triggers that drive key employees out of the business post-close. These risks are especially high in founder-led, relationship-driven organizations.

1. Compensation Changes

This is the number one driver of attrition following a deal. Whether it is an altered commission structure, a reduced bonus plan, or delayed payouts, changes to compensation erode trust and signal to employees that their value may not be fully recognized by new leadership.

In some cases, adjustments are necessary for sustainability. But when those changes are introduced without context or without relationship equity, employees often interpret them as disrespectful or opportunistic. And once that sentiment takes hold, the exit clock begins ticking.

2. Job Structure Disruption

Shifts in daily responsibilities, reporting lines, work location, or tools can be disorienting for employees who were thriving in the previous setup. While integration plans may be well-intentioned, they often remove the autonomy and routine that helped top performers succeed in the first place.

New systems and processes should be introduced gradually, with a strong emphasis on communication and support. Otherwise, the friction creates frustration—and frustration leads to disengagement.

3. Lack of Strategic Clarity

When a business changes hands, so does its vision. Unfortunately, too few acquirers clearly articulate where the company is going and how existing team members fit into that future. Employees begin to feel like passengers rather than partners. When the roadmap is unclear, people fill in the gaps with fear.

This is especially true for long-tenured employees who were aligned with the founding team’s mission. In the absence of clear direction, they may interpret silence as a lack of purpose or value alignment and begin looking for a more grounded opportunity elsewhere.

4. Loss of Leadership Access

In small businesses, especially those under $25M in revenue, high performers often have direct relationships with the founder or CEO. They are used to walking into an office, grabbing lunch together, or weighing in on key decisions. When that relationship disappears, so does their sense of inclusion and influence.

New owners must quickly and authentically build relationships with these individuals. Otherwise, the top performer begins to feel isolated, undervalued, and eventually expendable.

A Framework for Addressing Retention Risk

So how should acquirers and business owners approach the retention of top talent?

You must treat staffing due diligence with the same rigor as financial due diligence. It’s not enough to assess the balance sheet. You need to assess the team that delivers the revenue.

Here are five actionable steps to begin addressing the Million Dollar People Problem.

1. Conduct Human Capital Risk Mapping

Identify your top five employees tied to revenue, operations, and client retention. Understand their compensation, tenure, account ownership, and proximity to the prior leadership team. Determine what would happen if they left within the first 180 days post-acquisition. Build financial models that account for the downside of that risk.

If possible, engage a third-party expert to interview these individuals pre-close. If that’s not feasible, structure your post-close onboarding to prioritize these conversations early.

2. Delay Major Compensation Changes

Unless the current structure is untenable, hold off on making changes to compensation for at least 90 days. This period allows you to observe performance, build trust, and identify what works and what doesn’t before disrupting income.

In the meantime, focus on transparency. Let your team know that compensation reviews are on the roadmap and that their input will be considered. This can ease anxiety without creating distrust.

3. Establish Relationship Cadence

Set up one-on-one meetings with each key contributor. Weekly 30-minute touchpoints in the first quarter post-close can build rapport quickly. In these meetings, prioritize listening. Ask about their goals, their view of the business, and where they believe improvements can be made.

Use a simple shared agenda template or software tool (such as 15Five or a Google Doc) to structure these meetings and track action items.

4. Tie Incentives to the Future

Don’t just pay for the past. Create retention plans that reward future impact. This can include a mix of individual bonuses, team-based performance rewards, and small equity shares or phantom stock plans that vest over time.

Skin in the game isn’t just about money, it’s about signaling that you want them to grow with you, not just for you.

5. Communicate the Vision: Clearly and Often

People don’t need every detail of your 5-year plan. But they do need to know where the company is going, why the acquisition happened, and what success looks like in the next 12 months.

Even if you’re still figuring it out, share the process. Employees don’t expect perfection. They expect honesty.

Delayed Pain Is Still Pain: And It’s Always More Expensive

The biggest mistake we see in post-acquisition transitions is waiting too long to address talent risk. Leadership teams often assume that employees will settle in once the dust clears. But by then, it’s usually too late. Trust erodes quietly. Momentum decays invisibly. The most important employees make plans without ever saying a word.

By the time leadership recognizes the signs, the damage is often done. Key contributors have already begun exploring new opportunities or have mentally checked out, and the organization is left scrambling to contain the fallout.

This type of delayed reaction is not just inconvenient. It is expensive. Turnover of top talent affects your financial forecasts, customer relationships, employee morale, and momentum. It also often leads to a series of reactive decisions: overpaying for replacements, rushing onboarding, or shifting responsibilities in ways that disrupt the team even further.

People Are Not a Line Item. They Are the Leverage.

The best acquirers treat people as part of the valuation not as an afterthought. They understand that the spreadsheet tells a story, but the team delivers the result.

If you are acquiring or scaling a business, do not wait for turnover to teach you this lesson.

Make it part of your process.

Make it part of your playbook.

Because the most valuable part of any small business doesn’t show up in the purchase price.

It shows up when you invest in the people who make growth possible.

At Nacre Consulting, we use a framework called Head, Heart, and House to help leaders support their teams through seasons of change.

It’s a practical tool for understanding your people not just as roles on an org chart, but as whole humans, with unique ways of thinking, personal motivations, and real life outside of work that affects how they show up each day.

When leaders take time to understand how their team processes information (Head), what they value and need to feel connected (Heart), and what’s shaping their stability and focus outside of work (House), they build deeper trust, reduce flight risk, and create the kind of culture that holds through a transition.

If you’re wondering where to begin, we further unpack the Head, Heart, and House framework here: 

Unlocking Growth: The 3-Part Framework Every Leader Needs

Or, if you’re preparing to buy or sell a business, now is the time to assess the people-side of the equation. Let us help you with our Go-To-Market Talent Assessment to understand your team’s current strengths and risks. 

This article is based on insights shared during a live conversation between Patrick O’Connell and Jason Pearl on LinkedIn Live. You can watch the full replay here: LinkedIn Live: Retaining Talent in SMB Acquisitions.

Jason Pearl

Jason Pearl is the founder and CEO of Nacre Consulting, where he helps scaling companies unlock sustainable growth. Over the past 20+ years, Jason has guided businesses through startup, scale, and acquisition—generating more than $100M in new revenue in just the last three years. His secret is focusing on not just dollars generated but on the people behind the scenes who are producing the results.