SiNtx Technologies Inc (SINT)

[CL101]

Phase 3: Preparing for the transaction

Parties make sure their teams are briefed, ready and on the same page, and sign a letter of intent before they begin the due diligence process. It is important for parties to ensure that their legal documents (e.g., option plans, board of director notes, NDAs, partnership agreements, benefits plans) are organized and in good shape. Also crucial is for parties to ensure that they have completed the proper government filings, that they have adequate product and marketing documentation, and that their financial records are sound and have been audited by a legitimate third party. HR professionals are likely to be heavily involved in the collection and organization of such records.

The parties sign a letter of intent if they tentatively can agree on the priority issues involved in the transaction. A letter of intent is a document that seeks to provide some initial points of understanding and that binds the parties to keep the information discussed confidential. This document is signed prior to the start of the due diligence process and prior to formal board of directors' approval of the deal.

During the due diligence process, it is critical to read documents carefully to eliminate any surprises that could jeopardize the deal. Parties should decide up front how much information they will share during due diligence; they should expect to have to share a significant amount of detail. Parties must have the required documentation organized and prepare multiple copies so they will not be slowed down by copy requests. In addition, parties should be aware that due diligence almost always takes longer than expected."


Employee selection and downsizing >>>(CFO gone & Controller gone)
Early placement of management is a critical factor in beginning to stabilize the new organization. Any delays in placing key managers complicate the transition by increasing uncertainty, diverting attention and fostering internal competition. A major challenge for the acquiring company is in deciding who to retain, who to redeploy and who to terminate, as well as effectively managing those processes. Relocating key personnel or even entire departments may be necessary. See Employment Downsizing and Its Alternatives.

Ideally, the HR and management teams will have been able to assess the skills, capabilities, potential and motivations of key employees involved in the merger or acquisition. Typical methods include interviewing and testing techniques and the use of outside consultants. Once these tasks are completed, the HR team should take immediate steps to "re-recruit" and place these employees into key positions of the new entity. See Should employees complete new-hire paperwork after a merger or acquisition? and How do I handle forms I-9 during a merger or acquisition?

Most M&A deals count on both the organizational and financial efficiencies that will result from a reduction in the number of employees needed to run the new organization. This outcome means that HR will spend a large amount of time assessing employee knowledge, skills and abilities (KSAs) to decide who will stay and who will go. The strategy may include terminations, early retirements and a longer-term plan to simply not fill certain positions as they are vacated. The ways in which these decisions are made will—in the long run—be as important as the actual decisions themselves. Moreover, the manner in which talent management decisions are made will communicate a great deal about what the organization values.


https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/mergersandacquisitions.aspx