“Being stuck in a period of limbo waiting for an acquisition to be approved comes with lots of issues” (senior engineer). “We are in a state of flux as a result of the ongoing deal and no one really knows how long they will have a job for” (learning and development specialist).

For these and other Arm Holdings staff who have taken to company review site Glassdoor to vent their frustration over recent months, the waiting is over — though not quite in the way they might first have envisaged.

SoftBank, Arm’s owner, and Nvidia scrapped a deal for the latter to buy the UK-based chipmaker after nearly 18 months of rising regulatory hurdles. The collapse ushers in another period of flux for staff. Uncertainty is dead; long live uncertainty. Arm has a new chief executive who must aim at an initial public offering.

SoftBank will now receive a break fee of up to $1.25bn. But it is hard to put a price on what an Arm hardware design engineer described last year as “chaos, illogical actions and uncertainty around the Nvidia acquisition”.

Nvidia-Arm was just one example of many. More than 63,000 deals were announced worldwide in 2021, according to Refinitiv, a new record. Reports focus on the value — $5.9tn, another record — but the figure hides the potential toll on tens of thousands of employees worrying about their future. How can managers make them learn to love the threat of takeover?

Nervousness is understandable. Dealmakers are still mostly quite bad at turning their rosy deal visions into reality.

Deloitte consultants analysed more than 1,200 big US deals between 1995 and 2018 and found investors took an initial negative view of 60 per cent of them. These first reactions are a pretty reliable predictor of future returns on the acquirers’ shares, and of the disruption that can rip through the workforces of bidder and target. The hit rate is improving, but not dramatically: 56 per cent of transactions in the 2011-18 period triggered a negative stock market response, against 64 per cent for acquisitions between 1995 and 2002.

However the market reacts, “a deal injects a lot of uncertainty because of the changes that might be forthcoming,” says Deloitte’s Mark Sirower, veteran M&A adviser and co-author with Jeff Weirens of The Synergy Solution, which explores the implications of the deal study. “Leaders have to understand they’re setting expectations and they have to acknowledge the uncertainties and the concerns that employees have.”

As so often, though, the onus of interpreting change for staff falls on managers lower down the hierarchy.

In a 2010 study in Journal of Management, Satu Teerikangas looked at eight different acquisitions by Finnish multinationals. She found that managers and staff of companies that had previously been acquired were “better equipped to deal with the innermost feeling of fear that an acquisition causes an employee”.

Connections forged between the acquirers’ managers and their counterparts at the target companies before the deal’s completion were also critical in turning what looked like a threat into an opportunity.

Sometimes, a single individual could change attitudes. At a French target company, one person pointed out that when the site manager “would go over to staff and tell them that this is a good thing, they would believe him. In this sense he was good at managing the unit’s spirits . . . The site manager did an extremely good job of keeping the unit informed throughout the period of uncertainty. He explained, informed, and again explained”.

Sirower and Weirens lay out three steps: calm staff with reassurance about their jobs and benefits before the close of the deal; spark their excitement with the new vision once it is completed; inspire them about their future at the merged group.

Where does that leave staff marooned by a bid that never happened? As Arm warned in its last annual report, “any disruption to our business resulting from merger uncertainty . . . may continue or intensify in the event the acquisition is not completed”.

In a similar situation, after General Electric’s much-trumpeted bid for Honeywell was vetoed by EU regulators in 2001, incoming Honeywell chief executive Larry Bossidy had to scramble to persuade 50 key staff who had just quit, or were about to leave, to stay on.

Thankfully for Arm’s new chief executive, the overall impression given by employees is that it remains a decent place to work. They are said to be rolling up their sleeves and getting on with it. That suggests the CEO may be able to lead staff out of deals limbo and towards a potentially independent future by harnessing an emotion almost as powerful as fear: relief.

andrew.hill@ft.com

Twitter: @andrewtghill

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