Addressing M&A Concerns in Companies with Foreign Workers

Leon Versfeld, a highly experienced US immigration lawyer, shares a comprehensive guide to these M&A issues in the following feature.

To give an overview, what are the key immigration law issues present in a merger or acquisition involving a company that employs foreign workers?

There are several key immigration law issues that must be considered when a merger or acquisition involves a company that employs foreign workers. These include:

• Transfer of work visas. If the company being acquired has foreign workers on work visas such as H-1B, L-1, or O-1, the acquiring company must ensure that the transfer of these visas is handled properly. The acquiring company may need to file new petitions with the United States Citizenship and Immigration Services (USCIS) to ensure that the visas are transferred correctly.
• Compliance with immigration laws. The acquiring company must ensure that it is complying with all immigration laws and regulations, including those related to the hiring and employment of foreign workers. The company must verify the immigration status of all foreign workers and ensure that they have the appropriate visas and work authorisations.
• Due diligence. The acquiring company must conduct a thorough due diligence process to ensure that the company being acquired is in compliance with all immigration laws and regulations. This includes reviewing the company's immigration policies, procedures and documentation related to foreign workers.
• Changes in employment. The acquisition may result in changes to the employment of foreign workers, such as changes in job duties, work location, or compensation. These changes may require the filing of new petitions with USCIS to ensure that the foreign workers remain in compliance with their visa requirements.
• Potential layoffs. The acquisition may result in layoffs of foreign workers. The acquiring company must ensure that it is complying with all immigration laws related to the termination of foreign workers, including providing them with proper notice and ensuring that they have sufficient time to find new employment or leave the country if necessary.

Overall, it is important for the acquiring company to work closely with immigration counsel to ensure that all immigration law issues are properly addressed during the merger or acquisition process.

What record-keeping needs to be done to ensure that all relevant records, such as non-immigrant visas, are accounted for?

When it comes to ensuring that all relevant immigration-related records are accounted for in an M&A, it is essential for the acquiring company to establish a comprehensive record-keeping system. Here are some record-keeping practices that can help ensure that all immigration-related records are properly accounted for:

• Reviewing the seller's immigration records. During the due diligence process, the acquiring company should request access to the seller's immigration records. These records may include visa applications, I-9 forms and other documents related to the employment of foreign workers. The acquiring company should review these records to ensure that they are complete and up-to-date.
• Conducting a gap analysis. The acquiring company should conduct a gap analysis to identify any missing records or discrepancies in the seller's immigration records. This analysis should be conducted by a qualified immigration attorney or specialist who is familiar with the relevant immigration laws and regulations.
• Establishing a centralised record-keeping system. The acquiring company should establish a centralised record-keeping system to ensure that all immigration-related records are properly documented and stored. This system should include policies and procedures for the creation, retention and destruction of immigration-related records.
• Conducting periodic audits. The acquiring company should conduct periodic audits of its immigration-related records to ensure that they are complete and up-to-date. These audits should be conducted by a qualified immigration attorney or specialist.
• Maintaining accurate Form I-9s. The acquiring company should ensure that all Form I-9s are accurate and up-to-date. Form I-9s should be reviewed and updated on a regular basis to ensure compliance with the relevant immigration laws and regulations.

Overall, establishing a comprehensive record-keeping system is essential for ensuring that all relevant immigration-related records are accounted for in an M&A. By implementing these practices, the acquiring company can help mitigate potential risks and ensure compliance with the relevant immigration laws and regulations.

How should newly merged organisations go about combining compliance practices and files? What are the most important steps to take?

Combining compliance practices in M&A as it relates to immigration can be a complex process, but here are some general steps that newly merged organisations can take to ensure a smooth transition:

• Conduct an audit of existing immigration compliance practices. The first step is to conduct an audit of the immigration compliance practices of both the acquiring and acquired companies. This will help identify any gaps or areas of non-compliance that need to be addressed.
• Establish a compliance team. The newly merged organisation should establish a compliance team that includes representatives from both the acquiring and acquired companies. This team should be responsible for developing a plan to integrate the immigration compliance practices of both companies.
• Develop a new compliance policy. The compliance team should work together to develop a new immigration compliance policy that is aligned with the merged organisation's goals and objectives. The policy should include procedures for hiring foreign workers, completing Form I-9s, and maintaining immigration-related records.
• Provide training. Once the new compliance policy is developed, the newly merged organisation should provide training to all employees, managers and HR personnel on the new policies and procedures. This will help ensure that everyone is aware of the new requirements and understands how to comply with them.
• Update documentation. The newly merged organisation should update all immigration-related documentation, including Form I-9s, visa applications and other relevant records to ensure compliance with the new policy and procedures.
• Conduct regular audits. The newly merged organisation should conduct regular audits of its immigration compliance practices to ensure that they are being followed and to identify any areas of non-compliance that need to be addressed.
• Seek legal advice. The newly merged organisation should seek legal advice from qualified immigration attorneys to ensure that its compliance practices are in line with the relevant immigration laws and regulations.

By following these steps, the newly merged organisation can ensure that it is complying with the relevant immigration laws and regulations and mitigating potential risks.

Do the necessary immigration law considerations of these M&A deals change greatly from state to state?

The necessary immigration law considerations for M&A deals do not vary greatly from state to state because immigration law is governed by federal law in the United States. However, there may be some state-specific requirements or laws that need to be considered during the M&A process.

For example, some states may have their own employment laws that require certain disclosures or notifications related to immigration compliance during the M&A process. Additionally, some states may have their own requirements for the retention and storage of employment records, including immigration-related documents.

Moreover, some states may have different interpretations or enforcement priorities with regard to federal immigration laws, such as the requirements for completing and retaining Form I-9s.

Therefore, it is important for companies to seek advice from qualified immigration attorneys who are familiar with both federal and state immigration laws. These attorneys can help identify any state-specific requirements or considerations that may need to be taken into account during the M&A process and ensure that the newly merged organisation is in compliance with all relevant immigration laws and regulations at both the federal and state levels.

It is important for companies to seek advice from qualified immigration attorneys who are familiar with both federal and state immigration laws.

Speaking broadly, what are the costs associated with acquiring a company that employs foreign workers? How heavy can these costs be?

The costs associated with acquiring a company that employs foreign workers can vary greatly depending on the size of the company, the number of foreign workers employed and the complexity of the immigration-related issues involved. Here are some potential costs to consider:

• Legal fees. Companies may need to engage the services of qualified immigration attorneys to help with due diligence, the transfer of work visas and compliance with immigration laws and regulations. Legal fees can vary depending on the complexity of the issues involved.
• Visa transfer costs. If foreign workers are employed by the company being acquired and need to have their work visas transferred to the acquiring company, there may be costs associated with the transfer process, including application fees and legal fees.
• Severance payments. In some cases, foreign workers may be entitled to severance payments if they are terminated as a result of the acquisition. These payments can add to the overall cost of the acquisition.
• Compliance costs. Companies may need to invest in additional compliance resources to ensure that they are complying with immigration laws and regulations. This can include additional staffing, software, or training programs.
• Liability risks. If the acquired company has immigration-related compliance issues, the acquiring company may be liable for any penalties or fines imposed by immigration authorities. This can result in significant financial costs, particularly if the violations are widespread or ongoing.

The costs associated with acquiring a company that employs foreign workers can be significant, particularly if there are compliance issues that need to be addressed. Companies should carefully consider these costs as part of the due diligence process and work with qualified immigration attorneys to help minimize potential risks and costs.

How can a dedicated immigration lawyer help to minimize these costs and the overall administrative burden of the merger?

A dedicated immigration lawyer can provide valuable guidance and support throughout the M&A process to help minimise costs and reduce the overall administrative burden. Here are some ways in which an immigration lawyer can help:

• Due diligence. An immigration lawyer can conduct a thorough review of the target company's immigration compliance practices to identify any potential issues that may impact the acquisition. By addressing compliance issues early on, the acquiring company can avoid costly penalties and fines down the line.
• Visa transfer process. An immigration lawyer can guide the acquiring company through the process of transferring work visas for foreign employees. This can help ensure that the process is completed correctly and efficiently, minimizing the risk of errors and delays.
• Compliance guidance. An immigration lawyer can provide guidance and support on immigration-related compliance issues, such as completing Form I-9s and maintaining immigration-related records. This can help ensure that the acquiring company is in compliance with all relevant immigration laws and regulations.
• Mitigating liability risks. An immigration lawyer can help the acquiring company mitigate liability risks related to immigration compliance. This can involve developing strategies to address compliance issues and negotiating indemnification clauses in the merger agreement to protect against potential liability.
• Cost-saving measures. An immigration lawyer can help identify cost-saving measures related to immigration compliance, such as developing streamlined processes for completing Form I-9s and managing immigration-related records.

Working with a dedicated immigration lawyer can help to streamline the M&A process, reduce administrative burdens and minimise the risk of costly compliance issues. By leveraging the expertise of an immigration lawyer, the acquiring company can focus on the business aspects of the merger while ensuring compliance with all relevant immigration laws and regulations.

About Leon Versfeld

Please tell us a little about your journey into law.

I started my journey into law when I graduated law school at the University of Pretoria in South Africa. During my final years of law school, I articled for Deputy Judge President van der Walt of the High Court in Pretoria. After graduation, I was admitted to practice as an Advocate (barrister) in South Africa, taking on cases briefed by attorneys (solicitors). I was subsequently admitted as a Solicitor of England and Wales.

I got an opportunity to practice law in the United States in 2003 when I was successful with my ex parte motion to the Missouri Supreme Court to waive the requirement of having graduated from an accredited American Law School to be eligible to sit for the Missouri Bar. After passing the Missouri Bar, I was admitted to practice law in the US.

What attracted you to immigration law as your area of specialization?

As an immigrant to the US myself, helping others navigate the complexities of the US Immigration systems to help realise their version of their American dream makes for a very rewarding practice. With over 20 years of experience, my US Immigration practice focuses on employment-based immigration. More specifically, I specialise in assisting entrepreneurs, athletes and US corporations to complement our firm’s general immigration practice that covers all other US immigration-related matters.

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What are your professional plans for the latter half of 2023?

I currently serve as the President of the Kansas City Metropolitan Bar Foundation that spearheads three legal connection programs where the lawyers combine efforts to give back to the community through philanthropic initiatives. Collectively, I plan to steer my colleagues through our various programs like the Student Law Academy, Military Matters and Domestic Violence Alliance programs to ensure that all individuals, regardless of their socioeconomic status, have access to legal representation and assistance when they need it most.

Leon Versfeld, Co-Founder

Versfeld & Hugo, LLC

4717 Grand Dr Suite 250, Kansas City, MO 64112, USA

Tel: +1 816-565-4040

E: lv@versfeldlaw.com

Leon Versfeld is an immigration lawyer who represents a variety of small and Fortune Companies both nationally and internationally. He provides counsel to human resources departments on the hiring of foreign national workers, executives and specialised workers, and advises them on labour certifications and all issues relating to immigration employment compliance. Leon’s work has been highly praised and recognised by his peers and clients as published in ‘Best of the Bar’, ‘Super Lawyers’ and Martin-Dale Hubble’s ‘Preeminent Lawyer’, to name but a few.

Versfeld & Hugo, LLC is a Kansas City-based immigration law firm with offices in the US and Australia. The firm works with a wide range of national and international companies, assisting them in bringing key employees to the United States or Australia for short periods or for permanent residency. Versfeld & Hugo also works with individuals who are planning to migrate to the United States or Australia, or who would like to extend a temporary stay.