5 Important Immigration Considerations in M&A Deals

In mergers and acquisitions, companies often focus on the financial, legal and operational aspects of a deal. In today’s global economy, however, many companies have an international workforce, including highly skilled foreign nationals. That makes immigration issues an essential part of any successful transaction. Below are 5 top immigration considerations to keep in mind in M&A deals:

1. Acquiring companies should conduct careful due diligence.

Understanding the immigration status and documentation of foreign national employees of the target company can help an acquiring company understand the types of visas held, expiration dates, compliance with the terms and conditions of approved petitions and any potential immigration related issues that might limit an employee’s continued employment by the acquiring company. Done properly, a thorough review allows acquiring companies to better understand future costs of immigration obligations for foreign national talent. Immigration due diligence also benefits target companies by reducing immigrations risks. That is attractive to acquiring companies and increases the chances of a successful deal.

2. Acquisitions can impact visas and work authorizations.

M&As often result in material changes to an employer’s structure, name, location and corporate identification number. Those changes in turn may impact an employee’s continued visa eligibility and require filing new or amended petitions with immigration authorities. In the U.S., employees on L-1, E-1/E-2, and H-1B visas are most commonly affected, but the specific impact will vary case to case.

3. Corporate structure changes resulting from M&As can also affect permanent residence sponsorships.

In the U.S., where an acquiring company assumes the liabilities and obligations of a target, the acquiring company may be able to continue the sponsorship as a successor-in-interest. However, where there is no clear assumption of liabilities, a company may need to restart the green card process, resulting in duplicative efforts and increased costs for the acquiring company.

4. Failing to comply with I-9 work authorization verification rules and immigration laws can lead to serious consequences.

Following a successful M&A, the acquiring company will often be deemed as having inherited the compliance history of the target company. Noncompliance with U.S. immigration laws and I-9 work authorization verification rules can trigger audits, penalties, fines and bars to the company’s ability to sponsor work visas in the future. The acquiring company must ensure that the predecessor entity has maintained proper practices and recordkeeping. It is critical to assess early on potential liabilities related to immigration compliance.

5. Transition planning should include clear communication to affected employees and alignment of immigration policies.

Corporate structure changes can create uncertainty for key foreign national employees. To retain talent, proper transition planning should include clear communications to impacted employees about their transfer to the acquiring company and how that company will address their immigration needs. Following the acquisition, the immigration policies of the acquiring and target companies should be integrated to align with business goals.

Orrick’s Global Employment Team focuses on global employment law, immigration and equity compensation advice and counseling. Our team includes specialized immigration attorneys ready to assist clients on all immigration aspects of M&A deals and with operating a compliant employment immigration program. Please contact [email protected] for more information.