Mergers and Acquisitions - Monaco Solicitors

Mergers and Acquisitions

Is the company you work for being acquired by, or merging with, another corporation?

Mergers and acquisitions were famously called “murders and executions” in the 1980s, the reason being that the results of neither were pretty! In the cases we see involving mergers and acquisitions, often jobs are lost, lines of reporting are changed, promotion prospects are squashed and redundancies imminent. You can also read our article specifically about T.U.P.E (transfer of undertakings).

So, if you are an employee facing your company being merged or taken over, and you believe that the consequences are likely to affect you negatively, you should think about starting the negotiation ball rolling. Depending on the circumstances, it may be wise to bargain your way out of your job with a good exit package in hand, before the axe falls.

Three people in a work meeting room

Who is at risk during a merger or acquisition?

Employees facing consequences of mergers and acquisitions generally fall into one of three categories:

  1. They are employed by the company which is taking over another company.
  2. They are employed by a company that is merging with another to create a partnership of equals or other symbiotic relationship.
  3. They are employed by a company which is being taken over by a larger or more powerful concern.

Employees in category 1 are usually going to be fine, unless their employer dislikes them and sees the situational flux as an opportunity to push them out, in which case it’s a good time to start negotiating a settlement agreement for much the same reasons as we discussed in the performance management article.

Employees in category 2 are vulnerable to new economies of scale and role-overlap, but this usually takes between six months and a year to begin to make itself known and therefore they are better off remaining in their post until the situation looks like it may lead to redundancies.

Employees in category 3 are the most vulnerable. It is they who are now at the mercy of a larger business, of managers who do not know them, have no relationship with them and are likely to prefer their own staff over them when push comes to shove.

Why are jobs at risk?

Sometimes a larger company acquires another, and simply wants the business to continue running and expand naturally. This is rare given one company has to buy the shares of another (at an inflated rate if they are a plc, as a takeover always pushes up share prices). Either that or they have to make a global offer for 100% of the shares and assets (as is usually the case in a private limited company).

This will cost a lot of money, and in order to realise an investment sooner the purchaser will usually try and make efficiency savings (i.e. job cuts, pay cuts, bonus cuts, streamlined structures, fewer promotions, not replacing staff who are leaving, etc).

This almost always leads to disaster and a terrible working environment. So if you are facing this scenario, believe your job is going to be affected and see an opportunity to start negotiations, then it’s an opportune time to raise the prospect of leaving.

When is a good time to suggest leaving with a settlement?

Well, it could be when some of your role is being given to someone else without you having been consulted. It could be when your clients (which you have had for years) have suddenly been given to another employee. You could find that decisions that you usually take are being taken by someone else.

These things almost always happen following a merger or acquisition, and taken together or on their own these instances may amount to constructive dismissal and/or a breach of the TUPE regulations (again, see our article), in which case it’s a great time to start negotiations with your employer regarding a settlement package.

How to start negotiating a settlement

If this has happened then it’s time to raise a formal grievance setting out these complaints openly in writing, while also sending a “without prejudice” or “protected” letter offering to leave employment under a settlement agreement in return for your notice and an ex gratia payment.

You might also be interested in reading our articles on other common scenarios leading to constructive dismissal:

Next steps

If you want to talk to us about your work situation, including your next steps and whether you deserve a better deal, just get in touch on 020 7717 5259 or click here to request a free no obligation 15 minute consultation.