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Exactly.
My own experience in IT with companies which were even just starting to talk about layoffs is that the people who can much more easilly find new jobs - typically the better ones and the ones with hard to find or in more demand expertises - are the ones who leave first, often preemptivelly (though it does depend on their chances to get compensation for being dismissed and how much, so for example in certail legal jurisdictions were compensation depends on years employed there, you might seen the best of the newer employes just take off whilst the ones with many years there hold on for compensation because it's worth it for them).
In fact if you're going to do cuts you better have the list of positions which are going to be cut already planned because in that period of uncertaintly between knowing there will be layoffs and knowing who is going to be kicked out is when those people who can easilly find another job will leave, if only because that removes the uncertainy of if and when they'll stop getting paid, reduces the risk of a gap between jobs and even lets you take your time when searching for a new job and thus get a better one (if you're kicked out whilst still having bills to pay being selective about your new job is sometimes not possible).
Even were such effects only impact a small number of employees, it's never the least useful ones that leave preemptivelly.
In this specific case with an ultimatum of the "do this thing that's going to be worse fo you because I say so, or else" kind, that's just going to give more reason for the ones who can leave more easilly to leave.
Yep, and once you get people looking at the greener grass elsewhere, you've started the slow roll of attrition of your top talent even they don't leave right away
Indeed: when people in a company start thinking about change, maybe have a look around and find out they could be better of elsewhere than in their current position, at least some of those will leave and that will be the ones "who could be better of elsewhere" rather than the ones that "have the best job they could get with their qualifications" - in other words and from a pure business consideration point of view, it just increases the likelihood of losing the "beter value for money" employees.