Mergers and Acquisitions Employment Due Diligence & Support

One area that is frequently not given the attention it deserves in M&A transactions is labour relations. Failure to perform a comprehensive employment due diligence can be exceedingly problematic for the purchaser particularly in circumstances where the existence of industrial disputation is high. A thorough and comprehensive due diligence is an essential process for any entity looking to acquire or merge with another business. A corporate restructure can raise a number of complex employment relations implications which can have a significant impact on the profitability or even viability of the proposed merger or acquisition.

It is therefore imperative that the purchaser obtain and review as much information and documentation in relation to the employment history and current status of the prospective business as possible. A purchaser can then make an informed decision regarding the best way to obviate the need to deal with any employment risks or financial strain. This may include adjustments to the purchase price or level of financial investment, the incorporation of relevant warranties and indemnities into the contracts or walking away from the deal entirely.

Service Offering

We are proud to offer a leading service in the area of labour and employment relations due diligence for M&A transactions. Our product offering compromises of the following components:

1. auditing of employment contracts;
2. auditing of industrial coverage and underpayment exposures;
3. reporting on transfer of business obligations including in respect of enterprise bargaining agreements;
4. auditing of employee entitlements under short and long term incentives schemes;
5. auditing of accrued statutory entitlements;
6. auditing of independent contractor issues;
7. auditing of workplace culture issues;
8. auditing of union membership and industrial activity;
9. auditing of pending, ongoing and current employment litigation;
10. auditing of senior executive liabilities, namely:
    • golden handshakes;
    • reasonable notice issues;
    • restraint of trade and protection of confidential information; and
    • protection of goodwill and intellectual property.
11. auditing of workers’ compensation claims and work health and safety compliance;
12. auditing of redundancy entitlements and consultation obligations around change management; and
13. A thorough reference check on the key target employees including reputation issues

Once the above matters have been fully investigation, a privileged and confidential report will be made available to the purchaser by Sasphire Legal to ensure that proper adjustments can be negotiated prior to completion of the purchase.

Transitional Support

In addition, Sasphire Legal can offer continued support to the purchaser by way of the following services following the acquisition:

1. drafting letters of comfort to employees;
2. updating contracts of employment and workplace policies;
3. advising on employee retention strategies;
4. advising on selection and termination procedures; and
5. structuring executive incentive plans and emoluments.

The importance of conducting a due diligence from an employment law perspective should not be underestimated. An employment law due diligence is essential to any decision to acquire or merge with another business. Early advice should be sought about employment law matters in the course of any transaction where employee matters are involved.

Please enquire within if you wish to obtain further information regarding our employment due diligence services.