Publication
Top 10 insights from global M&A
An employment law perspective
Publication
An employment law perspective
Author: Matt Devey
Why do I love deals? Because no two are ever the same and I work with different people with diverse backgrounds and standpoints every day from all over the world. Surprises, time pressure, sector quirks, distressed versus thriving assets. Every transaction demands you treat it like your first, and it is intellectually stimulating and satisfying to contribute to getting the deal done.
Employment lawyers are in the thick of it because we are dealing with people and all the unpredictability and emotion associated with humans. Here are ten learnings from my global M&A exposure that I would like to pass on.
If you're selling, you have the luxury of time to prepare. If you're buying, that runway is usually shorter, but planning still pays off.
A share sale can be, employment-wise, largely business as usual, though it still throws up challenges. An asset sale is an entirely different animal, especially in Europe, where complexity multiplies fast. Add in RIFs, restructurings, carve-outs of businesses or employees, transitional services agreements and PEOs, and there's no shortage of complexity to manage.
In Europe and parts of Asia, employees typically transfer with the business by operation of law on an asset deal or carve-out. Elsewhere, they can be left behind or separately onboarded. Either way, expect careful commercial thinking about who transfers, how, and what happens to employees who refuse to move or don't receive offers.
I read many DD reports or LFBs with little value or getting lost in details that have little deal value. Whether you act for buyer or seller, targeted employment and benefits diligence has real value and surfaces compliance issues that matter: for price valuation, deal documents, disclosure schedules, W&I insurance and post-closing planning. Skimping here is a false economy.
Sometimes the employees are the business, which means retention arrangements and non-competes through closing take centre stage. Sometimes it isn't even clear which employees belong to the business being sold. Work out early who is key, who is managing the business and who is genuinely deal-relevant, then build retention around that.
Even on share sales, benefits and pension arrangements are usually affected in some way. Good financial advisers and a strong HR practice or consultancy add real, tangible value here.
Buying a business doesn't automatically entitle you to see all the employee data that comes with it. GDPR makes this genuinely hard in Europe, with serious penalties for getting it wrong, but it's manageable with the right safeguards in place.
Ignoring employees and employee representatives is not a serious option, particularly in today's more sensitive environment. Unions and works councils can complicate a deal, but they can also help it along. Securing buy-in often smooths the process. Where consultation isn't appropriate, communicate carefully and stay within the law.
In France and the Netherlands, and to a lesser extent Germany and Italy, works councils' information and consultation rights can materially affect both when a deal can sign, close and how it's structured. Factor this into the timeline from day one and onboard an employment specialist early.
Sellers, particularly in auction processes, are driven by ESG considerations or their own labour relations concerns and are pushing harder for job security, maintenance of employment terms and "kept whole" commitments. These are commonly seen for 12 to 24 months, sometimes longer and occasionally not at all. Buyers should plan ahead for how they will effect necessary change within whatever restrictions they've accepted.
The clients who get the most value from us are the ones who treat us as an extension of their own team. Working hand in hand with in-house legal and employment functions delivers better outcomes for everyone.
