A merger agreement (or “definitive merger agreement”) is the legal contract that is drawn up and signed by both parties when two companies merge. Its terms and conditions can be quite detailed, and it usually spells out several parameters regarding staffing actions to be implemented.
The merger agreement provides HR with important considerations that may guide how staffing decisions will be made. So, as part of your decision-making process, you should review the merger agreement carefully to see:
- Which employees would be owed cash or stock benefits upon termination (this helps determine the hard costs of staffing changes)
- Whether certain employees are contracted to be kept on staff (this helps prevent a legal liability for your failure to honor a pre-merger agreement with the employee)
- If there are any non-compete clauses for specific employees in the agreement (this helps protect your investment and ensure profit projections)