French Companies Must Now Inform Employees Of Potential Acquisitions

Photo Credit: Adam Gregor / Shutterstock

Photo Credit: Adam Gregor / Shutterstock

A recently passed French law that takes effect on November 1 will require companies with less than 250 employees to inform employees of any intention to sell the company (or a majority stake in the company). This law will certainly have a ripple effect on startups, where deals are often made fast and furious, with the biggest acquisitions in the past three years often happening in a matter of weeks.

Specifically, the law states that two months before the cession (or ending) of the company, employees who have opted in to know about such activity must be informed of the intent or pending action. While it’s not clear whether a workaround to this may include signing a deal that takes effect two months down the road, it certainly could make things difficult – recently a close friend of mine, in trying to have his company acquired, saw one buyer walk away because of employee response to the buyer in question.

Employees who opt in will have to sign a confidentiality agreement, and, if they are not properly informed, may take action no more than two months after said cession is official. In taking action, they can potentially overturn the acquisition decision in court: I really can’t wait for the first example of that to come into play.

Keeping high-level decisions out of prying ears can be tough. Though the law seems to imply that only employees who actively announce their desire to remain informed must be informed, it’s hard to tell what precedent this law might set for future legislation.

Startups move fast, and pitching your acquisition to your investors, your board and your cofounders is hard enough without having to make sure your employees are on board.

This post was originally published on Rude Baguette.

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