Episode 5: Why should global mobility managers care about mergers & acquisitions?

Achim:  Hi I’m Achim Mossmann, Principal in the KPMG Global Mobility Services Practice.  And I am joined by Catherine Maldari, managing director in our GMS practice……  Catherine, welcome to this discussion about the impact of mergers & acquisitions on global mobility programs.

Catherine: Happy to be a part of it.  Allow me to kick things off Achim, by setting some context.  There is quite a bit of activity in the Mergers and Acquisition space (M&A) and organizations often underestimate the impact on global mobility and globally mobile employees.  Both you and I have been involved in some interesting projects as a result of this over the years.

Achim: Yes, this is true.  Well, people listening may have heard of some of the more famous mega- M&A deals that have made the headlines over the years, Dow Chemical and DuPont, Heinz and Kraft Foods, and Bristol Myer’s Squibb and Celgene, to name a few…

Catherine: ..and these are just the head-line grabbers… the majority of deals are not quite so “mega”.  Alone the 1st three quarters of 2019 saw deals worth $2.9 trillion …! 

Achim: And deals are happening across industries and for profit and non-profit equally.  So, M&A activities are here to stay and will have an impact on your global mobile workforce.

Catherine: Looking at it from a global mobility standpoint, the first questions we get from clients and the assignees are - what do the changes mean?  How will global mobility programs on each side of the deal be affected? The question we can address today is simply - What should global mobility program managers be doing once they learn that a deal is in the cards?

Achim:  Great question. It’s important that the head of global mobility gets involved in the deal as early as possible and understand what the mechanics and the timing of the deal are to start planning how it impacts for their assignees. For example, the organization should determine the impact to the letters of assignment, the assignee immigration status, certificates of coverage, global compliance, and other assignment related topics. 

Catherine: Once, mobility and HR leaders have initial answers to these questions,, pro-active communications to your assignees are critical to prevent the “rumor mill,” and to ensure that your employees stay focused on their day to day job instead of worrying.   

Achim:  To be honest Cat, they may be worrying.  They may have spouses working in the foreign location and children in school.  They may be homeowners or locked into leases. 

They need to be prepared for questions and concerns… Providing appropriate and sensitive support and guidance is key.

Catherine:  This may also be a good time to try and understand the deal-partner’s corporate culture, global mobility policies, its assignee population – including what types of assignments are represented -- and their geographic spread, amongst other things. 

Achim: Right.. This is a good “next step”.  It also is a good time to undertake a “health check” on your own global mobility program and its policies.  As the deal goes through, information and data will need to be obtained and shared with executives and key organizational stakeholders and possibly also your deal-partner counterparts. 

Catherine: Valid point.  I remember when I was onsite at a client I needed to provide policies, processes, vendor relationships, assignment types, assignee locations, compensation and payroll, and so on at the ready once the deal partner was ready to come to the table with HR, tax and mobility….   

Achim: And my guess is that wasn’t easy to do since it was ad hoc? …[Catherine: Correct!!]…. There are things that need to be done before the acquisition or disposition occurs, as it occurs, and after the dust settles from the deal.  However, timelines may not be perfectly linear.  Often, throughout the transaction organizations may face what is often referred to as a ‘chinese wall’ or silence requirements affecting the passage of pre-deal information between companies.  Thus, having a playbook and due diligence checklist available to respond quickly once information exchange is permissible is critical. 

Catherine: With these deals, both sides are looking at synergies and sometimes those result in a decision of redundant roles/positions.  Now the question is: What is the policy for terminated or redundant employees who are on assignment? 

Achim: And program managers need to determine if they repatriate their employees before or after termination, what are the legal ramifications, which severance policies apply, to name a few. Complicated stuff and it is advisable to work closely with legal counsel and home and host HR to get to the best conclusion for the organization and the employees.

Catherine:  Program managers have their work cut out for them. They need to assess whether their mobility program and policies have what it takes to manage foreseeable and unforeseeable circumstances arising from an acquisition or disposition. 

It is essential that program managers undertake their due diligence – the “health check” that you referred to – if not today but once they learn of a deal on the horizon; figure out where the gaps are then take the steps to address them.

Achim:  M&A will continue to be part of the global business environment – they certainly complicate managing global mobility programs and globally mobile employees!  But once the writing is on the wall, it’s time to get started doing your due diligence.  Ultimately, the aims should be to help allay assignee anxieties and contribute to an efficient, smooth transition for your global mobility program and your assignees, as your organization goes through this transformation.

Well, Catherine, thanks for being a part of this discussion and helping put things in perspective.

Catherine:  It’s been my pleasure and great to see you again Achim. If you have thoughts on today’s episode or ideas for future episodes, send us an e-mail at us-taxwatch@kpmg.com.