In Australia, employment-related issues are becoming increasingly important for buyers in M&A transactions – and not only in the due diligence stage, but also in the negotiation of transaction documents (particularly in the warranties and indemnities) and post-completion items.
The employment landscape in Australia is complex, heavily regulated and constantly evolving. When employers are noncompliant (even inadvertently), it can give rise to serious legal, commercial and/or reputational risks. In such an environment, employment due diligence is no longer just a “box-ticking” exercise, and it is important that buyers “look under the hood” to better understand what workforce risks may need to be identified and addressed as part of the transaction, and proactively managed post-completion, to achieve a sustainable and successful business.
The risks that could become relevant for the buyer will depend on the type of transaction (i.e. whether it is an asset purchase, a share purchase, or a combination of both). This article explores some of the common red flags that buyers need to be aware of.
