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Will an upcoming merger or sale mean layoffs for your staff?

On Behalf of | Feb 6, 2021 | Mergers & Acquisitions

As someone who owns or operates a business, you probably have a deep sense of personal responsibility toward your employees. You want to see them thrive and succeed in their lives and their careers. Sometimes, the decisions you make as an executive, manager or owner can have unintended consequences for the people who depend on your company for income.

For example, when another business wants to merge with your company or someone tries to buy out the whole business, you may see it as a lucrative opportunity. However, what benefits you could mean the loss of employment for much of your staff.

Why do mergers and acquisitions lead to layoffs and firings?

When two companies combine to create one larger business, there will inevitably be some redundancy. Both companies probably had their own human resources department and accounting team. They may also operate in two distinct facilities that will need to combine in to one space eventually. Layoffs and terminations help keep operating costs lower for a company built from two businesses.

With a straightforward acquisition, however, the new owner or management team will typically want to bring in people they know and trust. While your staff may do an excellent job, they may find themselves replaced in short order after you sell the business.

You can negotiate certain terms when selling your company or merging with another business to protect your workforce. From requiring severance pay for anyone let go within five years of the sale to demanding that both companies eliminate redundant positions in equal proportions, there are many strategies that could help you navigate this process without abandoning your workers. An experienced attorney can help.