Employment Issues in M&A Transactions

Successfully managing employment issues can often be critical to the success of M&A transactions. In this article we identify a few of the typical challenges that will need to be managed.

 In an asset purchase, acquired rights provisions (e.g. TUPE in the UK) are likely to apply, which will add significant complexity to the transaction.

Due Diligence – a thorough due diligence process in respect of the target organisation’s employees is critical. It is important for an acquirer to understand employment terms, compensation and incentives, claims and disputes, collective agreements, compliance culture, and a range of other issues.

Process – where acquired rights provisions apply, both parties will need to follow information and consultation requirements which can add to the timescales and result in changes to the transaction.

Post-acquisition arrangements – changes to terms and conditions may be difficult to achieve in the short term, whilst rationalisation plans can lead to complex issues in relation to post-transfer redundancies.

Compliance and Standards – it is often the case that there is a mismatch between the standards and compliance programs of the acquiring and acquired organisations. It is important to review the compliance culture in the new combined organisations to ensure that the compliance program is still effective and that risks are appropriately managed.

Our consultants are well equipped to support your M&A transactions, including those involving multiple jurisdictions and cross border issues.

Author Roger Williams