Mergers and acquisitions ("M & A") or "consolidations" happen all the time. It's when businesses combine or join together to create a new, single business. There are a number of reasons why this happens. Sometimes it's done to control market share - one business "swallows up" the other and removes competition for its goods or services. Sometimes it's done to save money. For example, rather than breaking into a new market and selling something new it's cheaper to buy a business that's already in that market and selling that product.
Regardless of the reason, the new company is usually in a better position after a merger. That's often not the case for many employees of both businesses, though. It's common for one or both of them to layoff workers after a merger. Usually it's because they don't need the full workforces of both companies.
There are some steps you can take, though, to protect your job or your interests when a merger is in your future.
Contracts and Agreements
The first thing you should do before a merger happens, and even if you're just starting to hear rumors of one, is to take a look at any contracts or agreements you may have with your employer. If you survive the merger and get a job with the new company, in most cases any contracts and agreements you had with the old company still apply after the merger. Even if you're not retained, the contracts may impact your next job.
Some things to look at include:
- Employment contracts between you and your employer. Such a contract may provide specifics on if and when you can be laid off and any compensation you may be entitled to if you are
- Non-competition or no-compete agreements, which are commonly used to prevent employees from working with competitors or sharing trade secrets after they leave an employer
- Severance pay policies that give you the right to additional compensation or benefits, like stock options, if you're laid off
If you're retained after the merger, you may be able to negotiate a new deal on any or all of these contracts and agreements. In addition, you may want to try to negotiate other deals, like a:
- Golden parachute, which essentially is a severance package for top executives that typically come into play when a company changes ownership. They're designed to help you "land on your feet" and live comfortably after a merger. They usually provide for the payment of a substantial amount of money and often contain stock options or incentives
- Retention contract, which typically resembles a severance package - entitling you to extra compensation, or a bonus, and other benefits - in exchange for your agreement to stay in the company's employ during any merger to help make sure the merger goes smoothly
Other Things to Consider
In many cases, workers who are laid off due to a merger or acquisition are offered various tools and resources by the either the old employer or the new company. These may include things like career counseling, resume services, and outplacement and job search assistance. You should see if your employer has a policy of giving such services. If it doesn't, consider asking your supervisor or human resources department if these tools will be made available if you're laid off.
Sometimes, employees have to compete for a job with the new company. So, as odd as it may seem, you may have to interview with your old supervisor or manager to keep your job after the merger. You may or may not get some advance warning of this, so it's important that you watch how you act after a merger. Naturally, you may be upset because of the prospect of losing your job, but you don't want to threaten to file a lawsuit, or sabotage a deal, or take other similar vindictive actions. It simply doesn't help your chances of interviewing successfully for your old job.
Try to be the "model" employee during the transition. Stay upbeat and enthusiastic about your job and the future. And, keep track of things that you've done, both before and after the merger, that helped your old employer be competitive or productive.
Questions for Your Attorney
- What happens to my discrimination lawsuit that I filed against my employer after it merges with another company?
- I don't want to work for my old employer after a planned merger goes through. Is it better to ask for a severance package and volunteer to resign, or should I wait and see if I get laid off?
- Before a merger, my department was told that all of us would be offered jobs with the new company. Two weeks after the merger, 50% of the department was laid off, including me. Is that legal?
- How are employee benefits affected by a merger?