Considerations for Acquiring or Forming a New Team for Mergers and Acquisitions

A merger or acquisition is an exciting and pivotal time for a company no matter the goal of the transition. However, decisions made during the transition can greatly affect the successful launch and experiences for your clients and company personnel.

There are several considerations when thinking about your post-merger/acquisition structure including:

• What are the client servicing needs for the new business structure?
• Will the acquiring business bring in or retain all team members?
• Will a new team be needed or formed post-transition?

Regulatory, employment and labor law issues, contract restrictions, and other restrictive covenants should be considered when making these decisions. Establishing a game plan can streamline the transition and provide guidelines when making employee-related decisions.

Hiring Experienced Counsel

One step that can significantly minimize time, stress and cost is to hire experienced outside counsel that focuses on mergers and acquisitions to help manage or guide you through this process. For investment advisers and other entities in the financial space, it is advisable to retain legal counsel that is familiar with securities law and corporate employment contracts, including restrictive covenants such as non-competes and non-solicitation, so that these important considerations can be addressed.

Other important issues to consider include:

• Due diligence of onboarding employees including salary and benefits, equity or phantom equity interests, special accommodations and existing contract terms and conditions
• Broker protocol and other transition considerations
• Intellectual Property matters, such as trade secret considerations
• Contractual commitments, restrictive covenants and any other legal obligations

Merging Talent Across Organizations

Staff and other internal personnel can be affected by a transition such as an M&A. This is why it is crucial to maintain timely, and transparent communication from the very start as this goes a long way to reassure or minimize any negative effects of the change.

The right team can influence the success of a newly merged or acquired business.

Here are some factors to consider:

Employee Onboarding – Establishing Roles and Responsibilities: Ensure that the onboarded employees understand their role within the organization, including their new responsibilities and reporting structure.

Employee Terminations: If the decision has been made to terminate some or all prior employees, then several complex laws, employee rights, regulatory obligations, and contract provisions must be addressed.

Transitioning Employees: For transitioning employees, review contracts with counsel to ensure that all parties understand the conditions surrounding any non-competes, non-solicitation, trade secrets or transfer of client accounts.

Organizational Culture: The new business model may operate with a different management structure, or have different work behaviors or values, which must be considered during the integration phase.

Taking steps like hiring expert counsel to remove the guess work and help mitigate risk early on in the process will help to facilitate a smooth transition process.

If you are considering or undergoing a merger or acquisition and  would like to speak to one of our experienced attorneys regarding the proposed venture, please call us at 619.298.2880 or email [email protected].