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Will a merger impact your company’s employees?

On Behalf of | Jul 25, 2023 | Mergers & Acquisitions

If you’re considering a merger, you’re likely thinking about the ways that it can positively impact your company moving forward. Maybe combining with the competition will make both of your companies stronger. Perhaps the businesses will complement each other in ways that expand your potential audience or the services and products you can offer.

But what impact is that merger going to have on your employees? The truth is that downsizing often follows a merger. There’s usually some redundancy among the staff. Even if all of the staff are necessary before, combining departments may mean creating a significant overlap. It’s generally thought that this will impact about 30% of the staff.

Why does redundancy happen?

Redundancy simply occurs because there are certain departments that a business may need that don’t necessarily need to grow just because that business did.

For example, maybe the point of the merger was to increase production capacity. But the company doesn’t actually have to increase its marketing and branding efforts at all. They are already selling more units than they can ship, which is why they need the increased production abilities. So the marketing department at one company may be disbanded, while the production department at both will be retained during the merger.

It can be complicated to go about doing this type of downsizing in the right fashion, and it can also get very complicated to determine exactly how the workforce needs to be rearranged in this new format. As a business owner, be sure you know about all of your legal obligations and the steps you’ll have to take.