May 06, 2024
Don't Forget Employees in Your M&A
I've worked on sales and acquisitions of companies from tiny to ginormous. One of them involved sitting in a crappy office in Manhattan waiting for fax confirmation that the wire transfers of $9,999,999.00 went through. You could not transfer several billion dollars at once; the system couldn't handle that many digits yet. (I have many tales of the olden days. Sigh.)
When companies are changing hands, the transaction lawyers are focused on the deal documents. The buyer and seller are focused on the contingencies, due diligence, and money.
The employees are anxious.
New people, new rules, change, and disruption (the bad kind, not the salesy kind) mean everything is uncertain. Humans generally do not enjoy being scared and not knowing whether something they would not choose is going to happen to them.
During business sales and mergers, there's lots of discussion about the future of the executives—who stays, who goes, and who will stay a little while before they go. That's because executives have contracts and the lawyers have to draft them as part of the deal. Executives are not scared; they know what's going to happen and can handle financial ambiguity.
The employees don't and often can't.
Employees need information, transparency, and compassion. If you are terminating them, they also need severance in exchange for a release. Get your friendly employment lawyers involved before the deal closes for all the important compliance issues below. And make the transitions easier and kinder wherever you can.
Buying and selling the stock or assets of a business is a complicated process. There are always a number of issues to consider. It is critical that proper attention is given to employment and benefits matters.
In this article, we will highlight some of the employment and benefits issues that should be analyzed and addressed as part of the purchase or sale of a business.
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