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Tackling the Human Risks Following a Merger or Acquisition

This post looks at some of the role background screening can play to mitigate risk during mergers and acquisitions.

December 9, 2019

If your company is in the midst of a merger or a takeover, many unknowns may still remain. It’s therefore important to ensure that unexpected people risks aren’t lurking under the surface with the existing workforce. Whilst the cultural integration of employees and potential conflict with new management are often major concerns following a merger, background screening is frequently overlooked, potentially putting the overall security of a business in jeopardy.

HireRight’s 2019 EMEA Employment Screening Benchmark Report found that only a small proportion of companies are rescreening at key times, and of those that do, just 9% rescreen post-merger. This raises a question around whether or not businesses have fully considered all of the risks posed by employees following a merger or acquisition.

The importance of rescreening post-merger is not something that should be downplayed. A bad hire that’s kept on the payroll could lead to serious issues, especially if they have access to confidential or highly sensitive data which could be leaked. Costly lawsuits as a result of this are just one possibly harmful consequence of a bad hire and could complicate the already complex process of acquiring a company. With risks potentially stemming from a single rogue individual, the need to conduct thorough screening for a large workforce with varied and unknown backgrounds is clear.

For businesses that already have rigorous and comprehensive background screening processes in place, you should remember that other companies may not have a similar level of due diligence. It’s less likely that smaller businesses will have screened their employees, and if they have, it may not have been undertaken to an equivalent level.

There are also no guarantees that previous screening procedures were undertaken by a reputable background screening provider, or with a high level of accuracy. To ensure the safety of your workplace and current employees, it’s important that screening is incorporated into post-merger planning. A good way to reduce risk is to screen the entire acquisition employee population to the same standards as your own, where it’s appropriate to do so.

Mergers and acquisitions are becoming increasingly common in many sectors. Whilst some risks posed by any employee are unforeseen, it is up to businesses to take adequate precautions to avoid the risks that can be addressed. This is particularly true after mergers and acquisitions; applying a consistent employment screening programme for new or acquired employees will help to reduce these unnecessary risks.

Release Date: December 9, 2019

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HireRight is a leading provider of on-demand employment background checks, drug and health screening, and electronic Form I-9 and E-Verify solutions that help employers automate, manage and control background screening and related programs.