The Merger and Acquisition Process: Staying I-9 Compliant
by John Fay
According to the latest report from Morningstar, the first half of 2011 was an impressive one for mergers and acquisition deals, though it slowed for the second half of 2011. Overall deals still exceeded that of years prior. Along the same lines, Berkery Noyesí recent report confirms similar growth for 2011 in the education industry, with growing momentum for the first quarter of 2012. Appleís recent announcement to launch textbooks via the iPad has also created a big buzz in the education sector.
Mergers and acquisition deals, in fact, have peppered news outlets in recent months. Amidst the excitement of a merger or an acquisition, the challenges of staying I-9 compliant can easily be overlooked, particularly since most attorneys managing the M&A process are not traditionally immigration or employment attorneys, and the transaction itself can be lengthy and complex.
In the context of I-9 compliance, mergers and acquisition deals occur in various forms, including mergers of companies to form a new entity, acquisition of other companies, consolidations and spin-offs, to name a few. The issues of concern are two-fold, assessing non-compliance liability before and after the deal.
I-9 Risk Assessment Before a Merger or Acquisition Deal
Due diligence is an important process for any financial transaction. From a Buyerís perspective, assessing risk is usually the overarching objective in order to determine a fair purchase price. But how do we assess risk in the I-9 compliance arena? First and foremost, we start with an evaluation of the current enforcement climate. And in my November blog article discussing Secretary Janet Napolitanoís testimony before the U.S. House of representatives Committee, the statistics were startling! Since 2009, ICE conducted more than 6,000 I-9 audits of U.S. employers and issued more than $76 million in fines. The DOJ also increased criminal investigations of U.S. employers as a result of ICE I-9 audits. In short, the risks for non-compliance are not only real, but very costly. Potential Buyers should certainly take note, particularly where the legal ramifications involve transactions where a Buyer assumes most or all of a Sellerís liabilities. Here are some basic yet important considerations for pre-deal due diligence:
Armed with all the information above regarding a Sellerís I-9 compliance, a Buyer is now in a good position to assess a Sellerís liabilities (and hopefully make an informed decision on price).
I-9 Risk Assessment After a Merger or Acquisition Deal
The reality of most M&A transactions, however, is that I-9 compliance assessment is given little (if any) attention. Where Sellers are unable or unwilling to provide a Buyer pre-deal access to all of its I-9 forms for an audit, or where the Buyer simply could not conduct an audit of the I-9 forms, post-deal risks assessments can certainly be utilized. Steps 1 through 4 are helpful for post-deal Buyers in assessing potential I-9 penalties and/or fines. The following steps also allow post-deal Buyers to remediate any potential liabilities:
Staying I-9 compliant does not have to be a complex process even though M&A deals usually are. No doubt, the savvy Buyer will already have understood the risks of I-9 non-compliance and made headway into adopting and promoting a strong and comprehensive I-9 compliance policy.
Disclaimer: The information contained in this blog post is provided for educational purposes only, and should not be construed as legal advice or as a substitute for legal counsel. If you have questions concerning mergers and acquisition as it relates to I-9 compliance, please contact an immigration attorney to obtain advice which is tailored to your unique situation.
John Fayis an experienced corporate immigration attorney and I-9/E-Verify blogger with a unique background in designing and advising on case management technology. While practicing immigration in New York City, John designed and managed his firmís proprietary web-based immigration management system, which featured a fully multilingual interface for international organizations. In his current role, John serves as Vice President of Products and Services and General Counsel at LawLogix, where he is responsible for overseeing product design and functionality while ensuring compliance with rapidly changing immigration rules.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.