Welcome to Series 4, Episode 7 of the Moorcrofts Means Business Podcast!

In this episode, Corporate Partner Will Pearce and Employment Partner Lindsey Abbott discuss the role of employment due diligence in a business sale, exploring the key employment risks buyers and sellers need to consider and how businesses can prepare their employment affairs well in advance of a transaction.

Employees are a fundamental part of any business, and employment issues can have a direct impact on the value, structure and success of a transaction. Effective employment due diligence helps buyers understand the people risks they are acquiring, while early preparation can help sellers identify and resolve potential issues before they become a problem during the sale process.

In this episode they discuss key questions including:

• Why employment due diligence is an important part of a business sale and how employment issues can affect the value, structure and success of a transaction
• The key employment risks buyers and sellers should consider, including tribunal claims, grievances, discrimination and whistleblowing allegations, senior employee disputes and holiday pay liabilities
• Common red flags that can arise during due diligence, including minimum wage issues, missing employment contracts and contractors or consultants who may be incorrectly classified as self-employed
• Why sellers should prepare early by reviewing employment contracts, handbooks, benefits and other employment documentation, and identifying and addressing potential liabilities before going to market
• The importance of considering how employment arrangements may appear to a potential buyer and ensuring key documentation is up to date and properly recorded
• How buyers may seek to retain key employees following completion and the employment terms that may be particularly important for senior executives, including notice periods, bonuses, benefits and restrictive covenants
• What TUPE is and when it can apply in a business sale, including the distinction between share sales and asset sales and the impact this can have on transaction planning
• How employment issues identified during due diligence can be managed through warranties, indemnities and other protections in the transaction documents
• The importance of managing confidentiality and agreeing a clear communication strategy when informing employees about a transaction
• Why employment due diligence should not be treated as a box-ticking exercise and why understanding the people risks is essential to a successful transaction
• Why early preparation, transparency and legal advice can help sellers manage potential issues and support a smoother sale process

Tune in to gain practical insight into the employment aspects of due diligence and how early preparation and effective legal advice can help businesses identify and manage employment risks, protect value and support a smoother and more successful sale process.