In March 2025, we hosted a webinar in conjunction with Acquiring Minds. We discussed key employment-related factors to evaluate before and after an acquisition, including legal obligations, compensation structures, and potential risks.
Question Timestamps
- 0:09:29 – What happens when there’s a new boss? Employees often request raises or personal loans. How should an owner handle these conversations?
- 0:27:56 – When discussing non-competes and non-solicits, does a non-compete primarily apply to an employee starting a competing business rather than just working for a competitor?
- 0:29:03 – What risks and challenges should I expect when transitioning about 25 misclassified 1099 workers into W-2 employees?
- 0:32:03 – Since deals are usually cash-free and debt-free, how do you ensure that accrued liabilities (such as salaries, bonuses, and commissions) are carried over properly? Should they be treated like AR, AP, inventory, or working capital?
- 0:33:02 – How do you port accrued liabilities over, or do you? It sounds like, in many cases, the seller does not.
- 0:34:08 – In industries requiring trade licenses, if an employee agrees to temporarily hold the license for the company, what are the best ways for a new owner to handle this? Are there contracts or special incentives that should be put in place?
- 0:36:12 – Some buyers announce a six-month freeze on salary adjustments post-acquisition. This seems like a clean way to manage expectations. Are there any downsides? Do employees tend to push back on this?
- 0:39:11 – New owners often receive requests for personal loans or prepayments of salary. Is this always a hard no, or do some buyers agree? What are best practices for handling these requests?
- 0:40:46 – How does a non-compete apply to a key employee who has phantom equity? If they receive a significant payout from the sale, do they fall under the seller’s non-compete?
- 0:42:55 – Should buyers check for pending investigations or employee disciplinary issues before acquisition?
- 0:44:34 – When transitioning employees from 1099 to W-2, is there an ideal timeframe—immediately upon acquisition, six months later, or at the start of a new fiscal year?
- 0:45:02 – When should new employment contracts be signed? Should this be done on the day of closing or day one of ownership?
- 0:46:21 – Is it common for employees to sign non-solicits after an acquisition to protect business customers, rather than just protecting the previous owner or equity holders?
- 0:47:26 – Are there any special considerations when dealing with a unionized workforce?
- 0:51:06 – What about retention in reverse? If you already know you’ll want to let go of certain employees post-acquisition, does that change any of the typical considerations?
- 0:56:55 – Can you elaborate on equity rollover options and granting equity to key employees? What are the best practices for structuring these incentives?
- 0:59:56 – Why is phantom equity an attractive option for an owner?
Webinar Materials
If you want a copy of the materials we prepared for the presentation and provided to attendees, click the button below and we’ll email it to you.
If you need further assistance or are in the process of negotiating a letter of intent, contact us at info@barlowwilliams.law and we will be happy to discuss your situation.