For a smooth acquisition, address employee issues up front
As we've discussed previously on this blog, there are many factors that come into play when considering an acquisition. Whether for talent or technology assets, an acquisition creates significant change and there are many things to account for on both sides of the transaction.
Amidst all the details that go into an acquisition deal, it's possible that a major oversight could happen. An article in the Financial Post gives an example of what can happen when employee issues aren't taken into account in a timely fashion during an acquisition deal.
As the article describes, sometimes employee concerns are overlooked as other details of the deal are being worked out. One major oversight that could impact the seller in the deal is determining severance pay.
The risk here is that in certain circumstances, the amount of severance costs owed could turn out to be a significant sum, and it is crucial to calculate these costs in advance.To avoid unpleasant surprises, companies should plan to figure these amounts out well before the deal is nearing completion.
To minimize job loss, it's possible that employees could transfer to the new company as the deal goes through. However, for this process to run smoothly it is essential to develop clear communication throughout the negotiation process. When transitioning employees, they must be informed of their legal rights and options regarding severance and benefits.
Talent is a valuable asset. Companies going through the acquisition process should take the steps necessary to ensure that talent is allocated to the right places and that employees are kept informed about what is happening during the transition.
Acquisitions can be complex but an experienced M&A advisor can help you make the decision that makes the most sense for your company.