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3 employee-related risks to address during mergers

On Behalf of | Aug 22, 2023 | Mergers And Acquisitions |

Mergers are massive transactions that may take months to complete and that will fundamentally alter the organizations involved. There are many practical and financial considerations that the executives or owners negotiating the transaction will need to keep in mind accordingly.

There will also be staffing considerations that inevitably arise during a merger. Employees are often a company’s greatest resource and most unpredictable source of liability. Accounting for the three factors below can help businesses preparing for a merger limit unknown variables related to staffing.

Employee flight

A certain percentage of workers are likely to leave any organization undergoing a major transition. They seek a job elsewhere to avoid the sometimes-uncomfortable transition process that occurs during a merger. It is often smart to negotiate with key staff members to ensure their retention during and after the merger. Doing so helps ensure the company will retain a core crew of competent professionals regardless of what other changes may occur.

Lawsuits brought due to worker complaints

A merger can drastically alter the culture of a company and take what was once an abusive workplace and make it much healthier. Unfortunately, the combined organization may have liability for complaints brought by staff about practices prior to the merger. The due diligence process therefore generally requires a careful review of employee relations and the likelihood of employees initiating litigation against the company.

Layoff-related discrimination claims

During layoffs or mass terminations, which are common consequences of mergers, organizations need to be very careful to avoid behavior that may appear discriminatory. Sometimes, an individual’s bias might affect them subconsciously, meaning they don’t even recognize a pattern in their behavior. Companies therefore need to have redundant checks in place when letting go of multiple workers in a short amount of time to avoid allegations that protected characteristics like race, age or sex, played a factor in their decisions of who kept their jobs.

The executives and owners who employ a forward-thinking, holistic approach to planning for a merger are more likely to avoid worker-related liability issues in the future. Identifying staffing matters as a key source of risk during a merger may help an organization to more effectively minimize operational risks.


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