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 once famously called “murders and executions”.  There was a reason for that: the results are not pretty! Jobs are lost, lines of reporting are changed, promotion prospects are squashed and redundancies imminent.

Sometimes a larger company acquires another because it sees a model of efficiency and simply wants the business to continue running and expanding naturally. This is rare given one company has to buy the shares of another – often at an inflated rate –  or 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 may try to make ‘efficiency’ savings (i.e. job cuts, pay cuts, bonus cuts, streamlined structures, fewer promotions, not replacing staff who are leaving, etc). This leads to a difficult if not terrible working environment.

So, if you are an employee in these circumstances and the consequences are likely to affect you negatively, you may want to think about starting the negotiation ball rolling and bargaining your way out of your job before the axe falls on you.

Three people in a work meeting room

The prospects facing employees in mergers and acquisitions

If you are facing the consequences of a merger and/or acquisition, you will generally fall into one of three categories:

1) Employed by the company which is taking over another

2) Employed by a company that is merging with another to create a partnership of equals or other symbiotic relationship

3) Employed by a company which is being taken over by a larger or more powerful concern.

If you are in category 1, you are usually going to be fine, unless your employer dislikes you and sees the change as an opportunity to oust you,  in which case it’s a good time to start negotiating.

If you are in category 2, you 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 you are often better off remaining in post until the situation looks like it may lead to redundancies.

If you are in category 3 you are the most vulnerable. You are now at the mercy of a larger business, of managers who do not know you, who have no relationship with you and are likely to prefer their own staff over you when push comes to shove (as in pushed and shoved out of employment).

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 to raise the prospect of leaving your employment?

If you are facing the scenario outlined above, and believe your job is going to be adversely affected, then this could be an opportune time to raise the prospect of leaving.

It could be that some of your role is being given to someone else without you having been consulted. It could be that your clients (which you have had for years) have suddenly been given to another employee. You might 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.

If this has happened then it’s time to send a “without prejudice” or “protected” letter offering to leave employment under a settlement agreement in return for your notice and an ex gratia payment. If that doesn’t get the result you deserve then ramp up the pressure with a formal grievance, a subject access request, and finally an employment tribunal claim.

 

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 request a free 15 minute consultation, no obligation.