September 2023
Immigration
Impact High
Summary
In today’s interconnected world, corporate changes involving mergers and acquisitions, consolidations, spinoffs and other forms of restructuring (collectively, M&A) have become vital strategic tools for businesses seeking growth and expansion, or needing to right-size their operations. As companies engage in cross-border M&A activity, it is crucial to understand and navigate the complex landscape of global immigration considerations.
According to data from Statista, North America and Europe remain the leading regions in terms of M&A activity. Despite the challenges posed by the COVID-19 pandemic, both regions witnessed several high-profile deals over the last two years in sectors such as technology, healthcare, and energy. We anticipate this will continue into 2024 and beyond. Different sectors were impacted in different ways by the pandemic, leading to variations in M&A activity. For example, the travel, hospitality and retail sectors faced significant disruptions leading to a decline in deal activity whereas the tech, healthcare, energy and e-commerce sectors saw – and continues to see – increased M&A activity as a result, in part, spurring accelerated growth during the pandemic.
In this article, the Vialto M&A team explores the reasons behind the rise in M&A activity, the economic situation driving it, and the key immigration considerations that employers should bear in mind during such transactions.
The current global economic situation and M&A activity
Globally there has been a surge in M&A activity in recent years, particularly post pandemic with companies responding to economic challenges by reevaluating their structures and exploring new territories in order to access new markets and diversify their operations geographically, or consolidate and reorganise their businesses. This enables companies to tap into new talent pools to achieve a competitive advantage, and achieve economies of scale, or increase profits. By merging with or acquiring companies in other countries, organisations can quickly establish local operations and leverage established networks and expertise.
M&A activity can have a wide reaching impact on global workforces and foreign nationals who are on sponsored work permits or who have taken steps to gain permanent residency. This can also result in additional costs for employers, including additional reporting and filing costs. Read on to learn more about key immigration considerations and the main immigration priorities and risks for companies when embarking on M&A activity.
Key M&A immigration considerations for employers
When engaging in M&A activity, employers must carefully consider immigration matters to ensure a smooth transition for their workforce. Here are some essential immigration considerations for companies embarking on M&A activity:
1. Assessing workforce mobility: Employers should conduct a comprehensive analysis of the workforce of both the acquiring and target companies. Understanding the immigration status of employees and their ability to work in different jurisdictions is crucial. This assessment helps identify potential visa, work permit, residency, and compliance issues that may arise as a result of the M&A process.
2. Managing employee transfers: During M&A transactions, companies often relocate employees across borders or to new locations in the same country. It is important to understand the immigration requirements of the destination country and ensure compliance with local laws and regulations. Proactively addressing visa, work permit and residency applications, as well as avoiding potential work authorisation gaps, is essential to maintain business continuity.
3. Harmonising immigration policies: Merging companies often have different immigration policies and practices. Harmonising these policies and aligning them with the new organisational structure is vital. Companies should establish clear guidelines for managing work permits, visas, residency, and immigration compliance, ensuring consistency and clarity for employees throughout the transition. This may also entail assessing different immigration data management applications to identify the potential need to integrate different data sources.
4. Addressing compliance and due diligence: Compliance with immigration laws and regulations is critical to avoid potential legal issues, reputational damage, and status violations by the employees’ and their family members. Conducting thorough due diligence of the target company’s immigration practices is crucial to identify any compliance gaps or potential liabilities. This allows employers to address any deficiencies and mitigate risks effectively.
5. Retaining/acquiring key talent: As mentioned above, one of the primary reasons for M&A activity is talent acquisition and retention. Retaining key employees during and after the transition is essential for business continuity and long-term success. Employers should consider immigration-related incentives or benefits to retain critical personnel, such as sponsoring work permits, facilitating visa transfers, or providing relocation assistance.
6. Complying with statutory labour protections: Some countries impose duties on a surviving or acquiring company to satisfy employment obligations and protect the rights of displaced employees. An assessment of local laws affecting displaced workers is essential before the transaction closes.
Immigration priorities and risks for companies undergoing M&A activity
When companies engage in M&A activity, there are several immigration risks and priorities they should be aware of, considering the global immigration rules and regulations:
Compliance risks: Non-compliance with immigration rules and labour protections can result in significant legal and financial consequences for companies – as well as wider reputational damage. During M&A transactions, it is crucial to assess the immigration compliance status of both the acquiring and target companies. This involves reviewing visa and work permit documentation, ensuring proper record-keeping, and identifying any potential areas of past and current non-compliance. Failure to address compliance risks may lead to fines, penalties, business disruptions, reputational damage, and the loss of key employees.
Regulatory changes: Immigration rules and regulations often undergo frequent changes in different jurisdictions – and this has been particularly true post pandemic, with immigration rules playing catch up with new ways of working and travelling and with technological advancements never contemplated when the rules were originally enacted. M&A transactions that involve international operations must take into account potential regulatory changes that could impact the immigration status of employees. It is important to stay informed about legislative developments, government policies, and regulatory updates to ensure ongoing compliance and effective management of immigration-related risks.
Visa and work permit transfers: When merging or acquiring a company, or embarking on other corporate changes, the transfer of employees across borders is commonplace. As such, navigating the complexities of transferring visas, work permits and residency applications is crucial to maintain business continuity and compliance. Employers must understand the specific requirements and timelines for transferring or displacing noncitizen employees. This may involve reapplying for visas, work permits and residency applications or transferring existing ones to the acquiring company, which may take on the role of sponsoring organisation under a principle known as immigration successorship in interest.
How we can help
Global M&A activity continues to transform the business landscape. As companies engage in these transactions, understanding and proactively addressing the complex immigration considerations are crucial. Whenever M&A activity is envisioned, we recommend that an immigration and mobility consultation be arranged as soon as possible in order to discuss timelines, costs and compliance issues, protect against disruption and ensure business continuity and prosperity.
Vialto’s M&A team provides specific guidance and advice on assessing workforce mobility, managing employee transfers, harmonising immigration policies, ensuring compliance, and retaining key talent. Working closely with companies, we support employers to navigate the global immigration landscape effectively during M&A transactions, while enhancing employee retention and morale. Proactive planning and engagement with immigration experts contributes significantly to the success of these endeavours, enabling organisations to leverage the benefits of M&A while mitigating potential challenges.
Listen for more insights:
Listen to our ‘On the Move’ podcast episode 25: ‘Don’t let immigration issues derail your M&A deal’ where our global immigration team, led by Sharan Kundi (Partner, Global Immigration Practice Lead), discuss how immigration can impact a transaction, and provide practical advice on how you can address this important issue.
All our ‘On the Move’ podcast episodes can be accessed here: https://vialtopartners.com/podcasts
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
• Raj Mann, Director, Global Immigration Advisory Lead
• Hugo Vijge, Director, Europe Immigration Advisory Lead
• Angelo Paparelli, Partner, U.S Immigration
• Ian Robinson, Partner, U.K & Ireland
• Angus Adamson, Senior Manager, Global immigration
Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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