Due diligence in labor law

Special precautions during acquisition

If legal and business areas of a company are reviewed, it is called “due diligence”. Usually it is the prospective buyer who will do the review, for instance during takeover negotiations. However the review of one’s own company can be fruitful if outdated, inefficient and risky structures are to be eliminated.

Who can profit from due diligence reports?

The performance of a company is elicited in a due diligence report. Potential risks and possible need for action will be determined. This provides advantages to both acquirer and seller: The buyer is aware of the economic situation. He can, if necessary, demand warranty promise from the seller. For the seller the report acts as proof, so that the buyer cannot claim lack of knowledge afterwards.

Why due diligence is recommendable

During a due diligence investigation the work circumstances are assessed on a legal and economic basis. The occupational pension of the company may be a strong focus. A precise analysis of liabilities is highly recommendable. Hidden shortfalls in the pension fund or other shortcomings can be a high economic risk factor for your company. We therefore recommend: That you consider having a due diligence review of your company. Our law firm will gladly advise you in this regard. Just give us a call.

Caution: Be aware of employees right to objection

If an asset deal is made that involves the purchase of economic goods, the consequences of a “transfer of undertaking” (§613a BGB) need to be considered. With the acquisition, resources and employment are transferred to the acquirer. He enters the legal status as employer. However the workforce has the right to object to this.

Why precise knowledge of employment is essential

You should be aware of which employees possess the actual corporate know how and whether or not they can leave the company (objection, notice period, sabbatical, etc.). Also determine whether or not these employees are subject to obligation to confidentiality or restraint on competition. Furthermore have vacation and overtime balances, as well as bonuses and additional services compiled. After all, the workforce represents an essential value factor to the company. Our specialist will gladly help you further in this regard.

Only those who have exact knowledge of the employment conditions can know the market viability of the company. Have a company’s heart and kidney checked before you take it over and also consider having a due diligence review of your own company from time to time. Our law firm and our labor law experts can provide you with valuable services in that regard.

Who compiles a due diligence report? What requirements do you have to observe in the field of labor law?

Give us a call.
Phone: 06131 / 480 888 7