The current political and legislative climate regarding immigration has made it increasingly necessary for business leaders to adjust their thinking when it comes to managing international mergers and acquisitions (M&A). Issues involving immigration must now be tackled earlier in the transaction as failure to acknowledge existing immigration laws may create unnecessary delays and perhaps weaken the value of the deal by leaving key employees behind.
Advice to dealmakers
Moving forward, employers must do their due diligence in evaluating whether or not there are any foreign nationals on the payroll and if their status will be supported by the deal at the time of closing. In any transaction there may be foreign national employees tied to the seller whose immigration status is not suitable for employment by the buyer, but the key in brokering international deals is accounting for all necessary team members during the initial planning phase. All forecasting, of course, will be entirely dependent upon the type of deal.
Advice to HR managers
H1-B and L-1 visas are most commonly held by employees working for multinational companies. While quite similar, H1-B visas have more stringent educational/vocational requirements compared to L-1 visas. In many cases, there are special provisions in the law that allow these individuals to stay with the company depending on the type of deal.
The H1-B program, for instance, permits corporate reorganization employees to remain with the company, so long as the new company takes on the immigration responsibilities as the sponsoring entity. These typically include paying the prevailing wage, keeping adequate records and making certain documents available to the government and the public. Assuming the employee’s duties will not change as part of the deal, they do not need to file an amended H1-B petition.
If the transaction does not qualify as a corporate reorganization, H1-B employers must file a petition to make sure the new company can legally employ foreign employees as of the date of closing. U.S. law provides that as soon as this application is filed, the employee can work for the new company pending resolution or adjudication of the petition. This process is called “job porting,” which is defined by U.S Citizenship and Immigration Services as “changing the offer of employment from one job or employer to another job or employer.”
Employees holding L-1 visas are often at greater risk because their status is based on the qualifying relationship of their previous foreign employer to the new U.S. employer. Employers must confirm that the deal does not terminate this relationship in order for L-1 employees to maintain their status. For example, in an asset transaction, L-1 employment is integrally linked to the parent company, thereby terminating the relationship to the U.S. employer once the transaction closes.
Finally, an E-visa will depend on the company and the employee having the same nationality. When a company or its assets are purchased by owners of a different nationality, the E status is lost to the employee. Affected employees need to be considered in preparation for the transaction and the purchaser must evaluate whether another visa status is immediately available.
Based on the country of origin, or the type of transaction, other employment visas or immigration programs may also be impacted by an M&A deal. Canadian or Mexican TN visa holders, and employees applying for Green Cards, for example, can be affected by such ventures.