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FEATURE 52 www.canadianlawyermag.com "Having Q-and-As prepped in advance that everyone's on side with will alleviate a lot of necessary concerns and questions" by employees and present a positive view of the acquisition; for example, one that is being made by a strategic buyer that will add value to the company rather than simply a financial investor. Unionized workplaces Under Ontario's Labour Relations Act, among others, the purchaser inherits the state of play in a unionized workplace; if the collective bargaining agreement has expired or will soon, there are residual rights to negotiate. Galizia advises negotiating with the union through the vendor, "saying, 'if you don' t accept the following conditions, we're not buying the company.' It's not bad-faith negotiations, but a condition of the sale is that you'll get working conditions favourable to you." Labour unions may be more inclined to negotiate if there is a long-term relationship with the target company and a desire to preserve jobs, says Butti. "But [negotiate] in advance, before the deal is made." Avoiding pitfalls Outerbridge has seen cases in which the acquiror will insist on employees being terminated and paid by the vendor before being rehired by the acquiror, in the mistaken belief that the acquiror will not be responsible for entitlements accrued during the employees' prior tenure. But the Employment Standards Act considers employment to be continuous in the event of a corporate sale, she says, "even if there's been that termination and rehiring." Unless there is a 13-week gap between the termination of employment by the vendor and reemployment by the acquiror, which Outerbridge describes as tending "to be functionally impossible," employees who are terminated and paid by the vendor based on length of service and then rehired by the acquirer will still get credit for prior length of service, even if terminated later by the successor employer. Finally, don't overlook the personal side of personnel in an M&A. "Jobs are very personal to people," Butti says; employees take pride in their work and in the companies for which they work. Acquirors, therefore, need to pay attention not only to job roles, titles, salaries, pension and benefits but to the "soft" issues that affect culture, such as an employee handbook that doesn't conform to Canadian standards. "You want a happy workforce," she says. "With that comes extra time to ensure policies are Canadianized; you then get a more all-encompassing buy-in." MERGERS & ACQUISITIONS "You stress in those letters of offer the benefits or conditions that [are] more favourable to them, that's a plus for them by joining your company." Patrick Galizia, Norton Rose Fulbright Canada LLP, Montreal SHARE SALE OR ASSET SALE? Whether the deal is a share sale or asset sale affects an acquiror's responsibilities toward the employees of the target company. In a share sale, in which a buyer purchases the shares of the target company and the assets and liabilities that go with it, the target's employees remain with the company, although they typically receive formal offers of employment by the acquiror. In an asset sale, a buyer will purchase certain assets of the company but not the entire company, and non-unionized employees need not be kept on.