HR’s Expanding Role in Mergers and Acquisitions

When I wrote about successor liability in mergers and acquisitions (M&A) four years ago, my focus was fairly straightforward: HR leaders needed to understand the risks associated with inheriting collective bargaining agreements, pension obligations, tax liabilities, and employment-related claims.

Those issues haven’t gone away.

What has changed is the number of workforce-related risks that now show up during due diligence. In many transactions, HR is no longer reviewing only compensation plans, benefits costs, and labor agreements. Today, HR leaders are being asked to assess everything from pay-transparency compliance and employee retention to artificial intelligence tools used in hiring and performance management.

Toolkit: Using AI for Employment Purposes

As M&A activity continues across industries, it has become increasingly clear that people issues can have just as much impact on a transaction’s success as financial projections or operational synergies.

Successor Liability Still Matters

The traditional concerns surrounding successor liability remain as important as ever.

Whether a transaction is structured as a stock purchase or an asset purchase, buyers need to understand what obligations they may be inheriting. That includes not only collective bargaining agreements but also pending litigation, wage and hour claims, pension liabilities, benefit plan obligations, and government investigations.

From an HR perspective, one of the biggest mistakes organizations make is assuming that legal and financial due diligence alone will uncover every workforce-related liability. In reality, HR often possesses information that never appears on a balance sheet, including employee relations issues, retention concerns, workplace culture challenges, and labor-management tensions.

Labor Relations Remain a Moving Target

One area that has evolved considerably since 2022 is the law governing successor employers.

For years, employers generally operated under the assumption that a successor employer acquiring a unionized workplace would have bargaining obligations if there was substantial continuity between the old and new operations.

Recent litigation in Hospital Menonita de Guayama v. NLRB demonstrates how quickly the landscape can change. The July 21 decision, in which the D.C. Circuit held the National Labor Relations Board’s (NLRB’s) successor-bar doctrine to be invalid, has raised important questions regarding the NLRB’s doctrine and the extent to which successor employers must continue bargaining with incumbent unions following an acquisition. More broadly, it serves as a reminder that labor law remains fluid and that HR professionals should avoid relying on assumptions that may no longer reflect current law. 

For HR leaders involved in M&A activity, the lesson is simple: labor relations due diligence should go beyond reviewing the collective bargaining agreement itself.

Organizations should examine:

• Pending unfair labor practice charges.
• Open grievances and arbitrations.
• Workforce organizing activity.
• Bargaining history.
• Employee sentiment.
• Potential integration issues affecting represented employees.

These issues can significantly influence both transaction value and post-closing stability.

HR Q&A: What is an unfair labor practice by management?

The Rise of AI-Related Risk

One topic that was largely absent from M&A discussions in 2022 is artificial intelligence.

Today, many employers use AI-driven tools to screen applicants, analyze resumes, monitor employee productivity, generate performance metrics, and assist with workforce planning decisions.

While these tools may improve efficiency, they can also create compliance risks that become the responsibility of an acquiring employer.

Consider a few examples:

• A recruiting algorithm that disproportionately screens out older applicants.
• An automated assessment tool that creates adverse impact against a protected group.
• AI systems introduced into a unionized workplace without bargaining over their impact.
• Employee data is being used in ways that are inconsistent with company policy or legal requirements.

None of these issues may be obvious during a traditional financial review, but each has the potential to create significant exposure after a deal closes.

As a result, HR due diligence should now include questions about AI governance, vendor oversight, bias testing, documentation, and employee communications.

Pay Transparency Is Also Changing the Conversation

Another development that has become more prominent since 2022 is pay transparency.

As more jurisdictions adopt pay-transparency requirements, organizations are taking a closer look at compensation practices during acquisitions. Differences in salary structures, unexplained pay disparities, and inconsistent compensation practices often become much more visible once two workforces are merged.

The challenge for HR is not simply legal compliance. These issues can also affect morale, retention, and employee trust during integration.

HR Has Become a Strategic Player in M&A

Perhaps the biggest change over the past several years is the role HR now plays during transactions.

Historically, HR was often brought into the process after the deal was completed. Today, organizations increasingly recognize that workforce issues can influence whether a transaction succeeds or fails.

Retention of key talent, cultural integration, labor relations, compensation alignment, AI governance, and workforce compliance have become strategic business considerations rather than administrative concerns.

That shift creates an opportunity for HR leaders to move beyond implementation and become active participants in evaluating risk and shaping transaction strategy.

Looking Ahead

Successor liability remains an important part of M&A due diligence, but it is only one piece of a much larger puzzle.

In today’s environment, HR leaders must consider labor relations, employee retention, compensation practices, AI-related risks, privacy concerns, and workforce culture alongside traditional legal and financial obligations.

The most successful acquisitions are not simply transactions. They are integrations of people, cultures, and systems. The earlier HR is involved in that process, the better positioned organizations will be to avoid surprises and realize the value the deal was intended to create.

David G. Epstein, SHRM-SCP, is director of human resources and talent strategy at Mobilization for Justice Inc., based in New York City.