Week Five Dq - Acquisitions and Employment

After a merger or acquisition occurs, financial priorities may shift and working capital may be strained. Thus, levels of self-assumption of risk may need to be lowered. The larger financial structure may need higher retention. Accumulation of values and interruption exposures may also need to be reevaluated. Some policies may be re-implemented to prepare for sales and spin offs. The corporate debt burden will need to be looked at and adjusted to fit into the corporate plan. A well conceived and effective program of communication is necessary between the acquiring and acquired firms. There should be an active liaison between the acquiring firm's brokers and insurance carriers and the acquired firm. Buyers should be concerned with financial statements on a regular basis, including reviews by an independent auditor. There will be present and potential liabilities and the acquiring firm should be concerned with that as well. All of these aspects will be important to new and remaining employees. Over time, existing agreements can be restructured, but until then, what was there when the acquisition is made is what should be followed. There could be some sort of employee retention package put in place to realign the interests of the valuable people of the company with the new owners.

The Federal WARN Act requires that covered employees provide advance notice before undertaking a mass layoff or plant closing, but the selling firm will not necessarily be responsible for the financial stability of those employees. This measures employment actions that occur at an employer's single site of employment, generally, a single office, plant, or facility. There are no special considerations with stock deals, as employees continue to be employed by the same employer. Asset sales does not require. Purchasers and sellers must both consider early in the transaction process the extent to which the seller's employees will become employed by the purchaser. Where significant