Mergers and acquisitions are incredibly fast-moving, with various stakeholders pushing to get the deal done.
Speed can lead to expensive legal claims and reputational damage if employment regulations are not complied with.
This is why the role of human resources during mergers and acquisitions is crucial to ensure both compliance and a smooth transition for all involved employees.
To help you avoid missing any critical issues, below are the top HR challenges in mergers and acquisitions.
1. The culture of the two merging companies
Both parent companies will have their own corporate cultures, systems, and ways of doing things. HR must make a concerted effort to understand each business and take the best elements of both organisations to create a dynamic culture that connects all the employees of the new company.
When a business changes owner, its employees may be protected under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). If so, the existing employees of the parent organisations will transfer to the new company under the same employment conditions. TUPE can be extremely complicated, therefore it is advisable to engage the support of an experienced employment law solicitor well before the transfer takes place.
3. Talent and skills gaps
The new company will have its own goals and objectives, separate from the parent businesses. HR teams need to get to know the transferring employees and the skills and experience each one brings. They can then start recruiting to ensure the new business has the key talent required to achieve its ambitions.
4. Skill double-ups
Unfortunately, M&As can result in having too many people skilled in a particular area. A consequence of this is possible redundancies. Any steps towards redundancies must be exercised with extreme caution to ensure TUPE regulations are complied with.
5. New organisational structure
The new company must have the right organisational structure to achieve its objectives. HR teams need to focus on the key roles needed within the organisation and ensure the right people are in place to drive progress and nurture existing and new talent.
Get legal assistance from LawBite
The key to avoiding messy employment issues in M&A situations is to get the HR team involved in strategy discussions as soon as possible. And when it comes to legislative compliance, investing in expert advice can mitigate the risk of time-consuming Employment Tribunal claims being brought by aggrieved employees.
LawBite has helped thousands of businesses achieve their commercial ambitions. To find out how we can help you on all matters concerning mergers and acquisitions, book a free 15 minute consultation or call us on 020 3808 8314.