Know Your Rights And Liabilities After Mergers & Acquisitions
These days, Mergers & Acquisitions of companies are taking place one after another. Several companies, financial firms, business organizations, entrepreneurs, etc, get involved in M & A transactions in order to increase the company size, market share, and revenues. They also aim to cut the operational cost and unnecessary expense.
Companies and financial firms must be aware of their rights and responsibilities after completing Mergers & Acquisitions. In a merger, two or more companies are combined and a new company is made. In an acquisition, one business buyers other company's business or stock and become bigger. Here is the brief overview of your rights and responsibilities that you must follow after Mergers & Acquisitions. Just have a look and educate yourself-
1. Select New Employees And Clients Carefully
When a firm completes a merger or an acquisition, several clients and employees are gathered instantaneously in a new company. You should not get carried away by emotions and select all employees on the basis of your needs and priorities. You must keep only those experienced and talented employees/clients that could contribute to the rapid development of your company and fire the rest of them. This may hurt the feelings of several clients/employees, but managing the firm's professional liability risk is more important than maintaining relationships with them. There are many employees who get frustrated with their termination and pursue you legally. To deal with such unpleasant situations, you must communicate with your ex-employees and try to settle the matter through dialogue. If not, then you can avail the services of M&A Law firms to solve the matter legally.
2. Review The Performance Of All Employees
Cutting the operational cost is of the main motives of M&A transactions. You should ensure that all employees of your company are following the due professional standards, policies and procedures, regulatory requirements, and their responsibilities related to their profiles. You must review the performance of all of your employees strictly and replace non-performing employees with suitable candidates to increase the clout of your newly established company.
3. Act And Like A Single Company
Companies that go under a merger or acquisition, try to find a firm that has the similar vision, strategy, and culture because there always remains the big difference between the work culture of two different companies. If you fail to integrate the work culture, it will be very difficult for you to reach your target and implement synergies of a merger or acquisition.
In case, each firm continues its operation separately, it may cause poor employee engagement and they will be in a confusion when it comes to the following of standards or protocols. Merged firms should think themselves as one firm, operate as one and run their businesses as one organization if they want to meet their ultimate goals.
4. Reduce the impact of HR in M&A
In an M&A transaction, the HR department is also affected up to a great extent. Therefore, as you need only talented and experienced staff to continue your business as a new firm, you should instruct the HR department of your company to perform well in terms of determining the quality, capability, fit and valuation of its new and existing human assets.
5. Consider Legal Liabilities Too
When you get merged with a company, the new company will have to shoulder the legal and criminal abilities and obligations of all of the merged companies. A merged company can continue its business, but always keep in mind that it will have to face the legal proceedings that were pending against it at the time of the merger. On the other hand, if a merging corporation filed a legal case against any other party before the merger, the case will continue against the name of the merged corporation or its responsible body.
Generally, mergers do require stockholder approval. But, they can speak against the merger or acquisition and increase the value of their shares. In this situation, the court will decide the actual price of shares. When an acquisition happens, the purchasing company is not liable to pay off the debts of the target company.
Going through all of these legal formalities is difficult and time-consuming. However, if you take the help of Mergers and Acquisition Lawyers, a lot of things become easier.
Final Words:
Mergers & Acquisitions are now very common these days. These are some main responsibilities and liability companies need to shoulder when they agree to an M&A transaction.