DealLawyers.com Blog

This recent insight from DLA Piper highlights employment issues that are key for successful post-acquisition integration and best managed before signing the purchase agreement. One consideration, related to work council and union requirements, has a potentially draconian penalty if not identified and managed:

Those who do not deal frequently with global collective bodies and unions are often surprised at the consultation requirements, and even co-determination rights (ie, where collective body approval is required), involved in M&A and integrations. For example, a local asset transfer in a post-integration process can trigger consultation requirements with local works councils that, if ignored, can lead to criminal and/or financial penalties. These processes may take many months and, in some countries (eg, Germany), may hold up employee transfers until concluded. Depending on the jurisdiction and circumstances, the works council may be able to obtain a preliminary injunction to prevent the deal from proceeding until co-determination rights are adhered to.

The article also discusses the need to assess employee transfer laws, understand any restrictions on terminations, consider employee immigration needs, identify roadblocks that may arise in attempting to harmonize employee terms and conditions and identify compliance requirements for the target’s equity awards under legacy plans as well as steps needed to transition the target’s employees to the purchaser’s existing global equity program.

– Meredith Ervine