Top key points for acquihiring in the UK
If you are considering acquihiring in the UK, there are critical employment tax and law considerations and HR factors to address. This guide highlights the top five key points to help ensure a successful acquihire.
What is acquihiring?
Acquihiring, a blend of “acquiring” and “hiring,” is the process of acquiring a company primarily to gain access to its talented workforce, rather than for its products, services, or other assets.
This strategy is especially common in industries where highly skilled employees, such as engineers, developers, or researchers, are in high demand. Instead of hiring individuals one by one, businesses acquire an entire team or company, ensuring a smoother integration of expertise and collaboration.
Top key points you must consider
While acquihiring in the UK offers significant benefits, such as retaining cohesive teams and accessing specialised knowledge, it also comes with unique challenges. These include navigating employment laws, retention strategies, and cultural alignment—particularly when cross-border regulations are involved.
1. Retention
Retaining key talent is crucial for any successful acquihire, particularly when the individuals you wish to retain are not the sellers. To encourage retention:
- Implement effective strategies such as competitive compensation and benefits packages.
- Showcase your company’s brand, vision, values, and culture to align employees with the acquiring business’s goals.
Engaging employees early in the process can improve retention rates and reduce the risk of losing valuable talent post-acquisition.
2. Immigration compliance
Securing specialist advice on immigration compliance is essential to ensure all retained employees have the right to work in their respective countries.
- UK-specific requirements: Non-compliance with UK right-to-work regulations can result in significant penalties.
- Global workforces: If your workforce operates internationally, consult local legal experts to meet immigration requirements in each jurisdiction.
Proper planning avoids delays, legal risks, and potential disruptions to the business.
3. TUPE regulations and employment status audit
Understanding the employment status of individuals is critical for legal and financial compliance. Employment status affects key areas such as tax obligations, intellectual property rights, and restrictive covenants. Conducting an employment status audit during due diligence will help identify risks and ensure compliance.
- TUPE regulations: The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) may apply if employees are part of the workforce. TUPE ensures employees retain their terms and conditions post-transfer but can expose buyers to claims for unfair dismissal or breach of contract if not handled properly.
- Tax implications: The employment status of individuals (employee, worker, or self-employed) dictates tax obligations for both the employer and the individual.
- Intellectual property: Under UK law, employers own IP created by employees in the course of their work. However, consultants retain IP unless explicitly stated otherwise in their contracts.
- Restrictive covenants: Employees are subject to stricter covenants compared to contractors or workers. Contracts must be carefully reviewed to ensure compliance without overstepping boundaries.
4. Indemnities in acquihiring
Identifying workforce-related risks is only part of the process—negotiating appropriate indemnities in the acquihiring agreement is essential to protect against potential liabilities.
- Indemnities can cover claims related to employment disputes, unpaid taxes, or breach of contract.
- Expert input ensures indemnities are robust and provide protection without compromising your position.
Addressing indemnity risks upfront minimises the likelihood of costly legal disputes post-acquisition.
5. Global acquihiring considerations
Acquihiring often involves global workforces, each with unique employment laws, tax regulations, and compliance risks.
- Local expertise: Engage local legal experts in each jurisdiction to navigate these complexities effectively.
- Cross-border retention: Consult with global mobility experts to ensure smooth workforce retention and compliance across multiple regions.
Proactive planning and expert advice are vital to managing international workforce challenges successfully.
How we can help
Our global mobility team specialises in acquihiring both in the UK and internationally. As a member of Moore Global, we leverage an extensive network of professionals across 114 countries to provide tailored advice on:
- Employment tax and law considerations.
- TUPE regulations.
- Immigration compliance.
- Retention strategies.
Wherever your workforce is based, we help you navigate the complexities of acquihiring , ensuring a seamless transition for your business. Contact us today to learn how we can support your acquihire.