Some years ago, a leading London corporate lawyer told The New York Times that in “merging two regular companies…you just do it and sort out the people issues afterwards.” (A. Sorkin, “A Lawyer’s Lawyer: Bridging Borders,” March 26, 2000) If that was ever true, it no longer is. In any merger or acquisition between two employers, especially in the cross-border context, human resources and employment law compliance have grown particularly vital.
But actually, employment issues do not drive the merger and acquisition process. If we break down the mechanics of how M&A deals get structured, workforce issues are at best peripheral to the M&A process. Human resources leaders rarely get a “seat at the table” in planning acquisitions and divestitures. Employment and even employee benefits lawyers usually play at best a supporting role, and sometimes little to no role.
Yet employment, benefits and compensation issues in cross-border mergers and acquisitions can get complex. Businesses need expert guidance focused on cross-border staffing challenges. One law firm has noted that “although M&A projects tend to be driven by corporate or tax lawyers, in many cases labor law issues have significant influence on whether…the deal is successful.”
Our discussion here amounts to a toolkit for US human resources professionals and lawyers responsible for the workforce issues in cross-border M&A deals (transactions where the seller employs staff in more than one country). We focus on the multinational buyer and seller as they account for the seller’s outside-US staff who, at closing, will transfer over to the buyer. Our discussion breaks down into three topics: (1) staff transfers outside the United States (vested rights, acquired rights, de facto firings); (2) an international M&A employment due diligence checklist; and (3) a checklist of workplace issues in international mergers and acquisitions.
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