New York City, NY asked in Mergers & Acquisitions for New York

Q: What is the best way to handle employee questions before an acquisition?

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1 Lawyer Answer
Jonathan R. Roth
Jonathan R. Roth

A: There are a variety of ways to handle the information depending upon whether there will be lay-offs or not. If some people are going to lose their jobs, then you need to prepare yourself and them for that event. If no one is being fired or laid-off, then the matter is much easier.

However to give a better response it would be helpful to know how many employees and locations are involved. Before the Merger key employees will need to know such as your CFO and people who will be involved in the due process and deal negotiations. You expand the group pre-announcement to key employees so you don't lose them because a rumor of a merger and if you do not have employment agreements with key employees you might think about getting one done in anticipation of the merger. They need to be sworn to secrecy and you need to keep rumors to a minimum. Once the deal is set, then you need to make an announcement to all the employees and be as reassuring as possible. This should always be done prior to a public announcement of the merger.

Most mergers are not mergers of equals, so you and your employees need to understand what changes will be forthcoming in terms of administration, benefits, reporting and so forth. That will not be included in the announcement. You need to be prepared for a lot of questions and have a team ready to answer those questions as best you can. Once the announcement is made, then start communicating to each department or group as to what changes will be forthcoming as soon and as may be appropriate.

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