Ethical And Legal Issues With Mergers And Acquisitions

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Ethical and Legal Issues with Mergers and Acquisitions The legal and ethical issues that should be considered before merger would be composing the team after the merger, pre-selection and selection of persons, and conducting full due diligence. Merging two companies consist of a plethora of rules and regulations, such as processes that are required and what is permissible. A certain legal issues at every stage of a merger or an acquisition. Being knowledgeable as to what these legal issues are imperative to alleviate ant undo repercussions. Due diligence is an important part of the process to consider. The process of Due Diligence is acting on all of the liabilities of the new business and verifying the accuracy of the claims made by the…show more content…
The seller will provide verifiable assurance in writing which is known as the warranty, which may also be required by the business’s assets, order book, employees, legal claims, audited accounts, debtors and creditors. It is also important to know that the seller can fully reimburse you in certain situations, which are called indemnity. After an acquisition or merger staff cuts or changes often take place to increase efficiency. Efficiency is a very attractive feature of an acquisition or merger, but cuts and changes may have to be made in order to achieve it. This leads to the next category “Information and consultation of employees regulations”. Although it is up to whoever is acquiring or merging with another company to give as much information to the employees as they like, you must make sure you abide by the Information and Consultation of Employees Regulations. Further, in a merger or acquisition setting, redundancies or other labour-related changes are more likely to occur and trigger the provisions contained in the Employment and Labour Relations Act 2004 governing the entitlement of employees. Under this Act, trade unions and employees must be notified even though they cannot stop a merger or an acquisition from taking place. (Mergers and Acquisitions 2015) It is imperative for the target company to review the acquirer’s representations, warranties and disclosure schedules to ensure there are no breaches of authority, capitalization, compliance with law,
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