In my experience, we have always had HR leadership at the table in due diligence. Typically HR and the target leadership work together to determine what employees are critical to retain in the long term and in the short term. That allows us to perform the following:
1. On day 1 we have welcome letters for everyone stating their title and salary. We do a market analysis on their salaries and occasionally they will receive an increase if needed.
2. Anyone who was identified to be needed in the short term, that timeframe is communicated to them and we often offer a retention bonus that if they stay through that time they will receive from the acquiring company.
3. Anyone who will not be staying on, it will be communicated to them on day 1 and we will have already negotiated whether the target company or the acquiring company will handle their severance pay. It has always been best practice to communicate early and anyone who is not retained should receive severance and feel they were treated fairly. You don’t want the acquiring company to get a reputation for coming in and not taking care of employees.
