Legal Blog

M & A Nuggets: Labor Matters

Group of a businesspeople standing together.One of the most important assets you will “acquire” when purchasing a business is the seller’s pool of employees.  That pool of employees has benefits and costs associated with it.  To understand those, a host of labor matters must be addressed during the purchase negotiations.  There are two primary areas to be concerned with.  First, you must understand what employment policies the seller has in place.  Second, you need to have a clear picture of any historical labor problems the company has faced.  It is important to understand the seller’s employment policies so that you can determine the extent to which they are consistent with your policies.  Employment policies to be informed on include retirement plans, group health plans, flexible spending plans, leave policies, expense reimbursement procedures, automobile allowances and compensation structures.  It is important that you understand the seller’s history of labor problems, as a poor history could indicate lack of necessary policies, failure to enforce policies or some other more troubling issue.  Particular issues to inquire about include employment litigation, harassment claims, work stoppages, worker’s compensation claims and employee turnover experience.  By investigating the seller’s labor matters, you can achieve an understanding of the potential costs associated with acquiring this valuable component of the purchase.


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Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress






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