As the economic outlook becomes more stable in the U.S., more and more corporate mergers are taking place, with 2015 seeing a record high of $5 trillion in deals (Harvard Law School Forum On Corporate Governance and Financial Regulation). 2016 is anticipated to surpass deals made in 2015, which can mean great news for the economy, but not so great news for the employees of the acquired companies. Mergers and acquisitions can be tricky, as they often mean restructuring, downsizing, and reallocating budgets based on the new shareholders’ goals. Because of all that is at stake in a merger, it is imperative that both the acquiring company and the acquired dot all their i’s and cross their t’s before finalizing the deal. This means that both parties should draw up and sign exact contracts ahead of time, and that the acquirer should familiarize itself with all existing contracts, covenants, and promises so as not to unlawfully terminate, demote, or relocate established employees.
At Garcia & Gurney, ALC, our experienced corporate attorneys help companies in the San Francisco Bay Area maximize the value of their business transactions by providing legal assistance where needed. Oftentimes this includes making sure that no existing contracts are breached and that all employees’ rights are upheld throughout the entire merger and acquisition process.
Employee’s Rights During A Buyout
If you have recently acquired a company, you may be tempted to restructure, downsize, bring in new employees, and make several other changes right away, but before doing so, make sure that you are not infringing on any employee’s rights, which include:
Contract Fulfillment: Before making any changes to your new company lineup, review employee contracts to make sure that the former owners did not include particulars for certain individuals, such as ongoing employment in the event of a buyout or merger, position retention, or the promise to never relocate them. However, the language must be extremely specific, and mention what is to happen to an individual in the event of a buyout. If nothing about a buyout or merger is included in any employee’s contract, you may be able to declare all existing contracts null and void.
Severance Packages: If the acquired company provided severance packages to its employees, you, as the acquirer, may be responsible for fulfilling the policy after a merger. However, it is best to review severance policies with your corporate attorney to get a better idea of what you are and are not responsible to fulfill.
Hire a Corporate Attorney to Help Finalize Your Merger
At Garcia & Gurney, ALC, we want to help your merger go as smoothly as possible. Our San Francisco Bay Area corporate lawyers are adept at reviewing existing employee contracts for unique specifications, stipulations, and promises, as well as at drawing up and finalizing new employee contracts. If you have recently acquired a company and merged it with your own, or if you are thinking about doing so, the attorneys at Garcia & Gurney, ALC will help you maximize your deal in a way that benefits all parties involved. To schedule a consultation with one of our experienced corporate lawyers, contact Garcia & Gurney, ALC at 925-468-0400 or online today.