1

M&A PLAYBOOK

Globalization Partners simplifies international business transactions by reducing the complexity of acquiring cross-border assets.

In international mergers and acquisitions, sellers can reduce dependence on transition service agreements (TSA), and buyers can compliantly onboard global headcount without setting up an entity in the country where the human capital is located, in as little as 30 days.

Our solution supports organizations as they expand into new countries quickly, easily and compliantly.

globalization-partners.com

Prepare for your next global transaction

2

Speed to deal completion

The struggle to achieve smooth negotiations and transitions

Time required

Rocky TSA executionCommon M&A HeadwindsMany companies use mergers and acquisitions to enter new markets, acquire new talent and grow their customer base. When these transactions cross borders, they bring specific complexities. Asset purchases, or carve-outs, also come with their own set of potential pitfalls, especially when companies are managing several transactions simultaneously and in different countries.

Focusing in on the most valuable resource, what headwinds do buyers and sellers face during international transactions when it comes to their teams?

During employee transfers, companies often spend six to 18 months building up from discovery to implementation in another country. Even when accelerated, the administrative burden required to smooth the path for seamless employee transfer falls squarely on the buy side’s team, which is likely already strapped for resources and time. In addition, certain timelines are out of all parties’ control – legal entity creation and business registration in new markets simply cannot be rushed at the government level. Ultimately, time to transaction close can make or break a deal, and a small number of transitioning employees does not translate into small challenges when pushing to meet TSA deadlines.

Globalization Partners knows how important it is to act fast and get reliable solutions in place for the most important element in M&A transactions: people.

Closing may go ahead on schedule but employees that need to be transferred over often get ‘stuck’. This means they remain employed by the seller, and leased to the buyer, and is generally proposed so as to keep the transitioning professionals on the seller’s benefit plan while the buy side builds up the capability to match benefits equally and keep teams whole. However, depending on the country requirements and costs required, doing so can prove impossible. In a similar situation, sellers may wish to shorten or eliminate TSAs, but buyers still need a stopgap solution for their new and valued employees.

With a Global Employer of Record, there is no need to slow negotiations while you set up global entities. Globalization Partners can act as a stop-gap HR solution or a long-term home for transitioning teams.

Sparse HR expertise in a global market

Compliance and labor law hurdles

Generating compliant employment contracts requires a specialized level of knowledge of a given country’s local HR practices and labor law requirements. If a company is compiling contracts for transferring employees in multiple countries, the time investment multiplies. Additionally, having limited knowledge of local regulations, standards and expectations can cause friction in the employee transfer process and is ultimately a time sink for your HR team. Without this knowledge, contract negotiations can quickly get out of hand in terms of time management, but also in terms of costs. Globalization Partners has developed technology that helps companies face this headwind, which allows buyers to generate compliant employment contracts in 187 different countries, in a matter of minutes and from any device. We have in-

3

Costs and value management

Capturing value

Owning your intellectual property

Cost of entity setup can be disproportionate to the size of the deal for low headcounts. Much of the expense is not obvious at first glance, and hidden red tape seems to appear along the way. Buyers’ main concern is likely the risk of losing human capital, and with it, priceless knowledge and experience. Our job is to preserve the negotiation’s most valuable asset in a cost-effective manner while you strategically plan for the future. The extensive expertise that Globalization Partners has garnered, over years of assisting in managing employee transition and retention, enables the buyer to retain human assets on deal close.

If a decision is made to rehire former employees as independent contractors, the value that they generate for the company is jeopardized. By shifting employees to a contractor situation, which is a route some executives do take, puts their IP at risk.

Globalization Partners protects the company’s ROI, avoiding the need for transitioning employees to enter a contractor situation. Hiring via an Employer of Record protects your IP whatever happens down the line.

Using an Employer of Record in Carve-outs and Spin-offs: Before, During or After? A global Employer of Record (EOR) can ease the pain of employee transitions. An EOR allows you to hire around the globe without setting up a legal entity, serving as the legal employer while you manage and direct the daily work of your new team member.

In the next three sections, we will explain how you can:

1. Be prepared for your next transaction. We help companies prepare forM&A negotiations. 2. Transaction announced - Stick to timelines and deadlines. Our solution allows you to meet short deadlines and stay on track for deal close.

3. Transaction closed - Keepthe momentum. Post-close, we’ll support your continued global expansion.

country HR specialists around the world for this reason — they are on hand to act as business partners to your transferring employees anytime, anywhere. Also, your team can use just one dashboard to manage everything relating to their international hires, streamlining hiring, onboarding, and the entire HR administrative process.

To keep your transition on track, we also have the largest team of employment attorneys in the Employer of Record industry to recommend risk management strategies around contracts. Ensure compliance and minimize surprise costs with Globalization Partner’s experienced team.

4

Companies never hatch a plan to acquire a new entity or sell a division lightly. Nonetheless, surprises are inevitable, and transactions are taxing. They require substantial forethought, planning and investigation. Our experts and solutions alleviate some of the burden by helping companies prepare for deals in advance by way of upfront information, proprietary technology, expert HR guidance and employee transition planning. When performing risk assessments, due diligence and before negotiating a definitive agreement, equipping your company with an EOR solution and global expansion specialists will make sure you are ready for the below concerns.

In a carve-out where the buyer is acquiring headcount, they may not have existing entities abroad through which to hire these employees. This is especially likely if the purchase was intended to establish the buyer’s presence in a new market. So, buyers will need to start lengthy and expensive processes, unless they bring on a qualified partner like a global EOR.

If the purchasing company decides not to set up legal entities or go through business registration in each country, employees might need to be leased to the buyer to remain on the seller’s benefit plan. This puts the seller in the position of assuring payroll for the hosted transitioning employees; the seller would logically fear being held liable if they do not receive payroll from the buyer in time. For this reason, sellers usually prefer a clean deal and employees off their books, which is a concern that Globalization Partners can remedy.

Let’s unpack the decision that needs to be made regarding employment contracts: executives will need to decide how to manage contracts for the transferring employees in line with individual country regulations. Companies likely face two overarching types, of which each nation has its own version:

Buyers and sellers need to understand which regulations apply to their teams and agree on who pays for benefits adjustments, extra costs and, in the worst-case scenario, severance, before closing deal negotiations. Alternatively, both parties can work with a global Employer of Record to match existing contracts for workers and avoid disruption to transitioning employees.

First of all, offer and acceptance transactions are found throughout the euro zone, and usually involve an automatic transfer. For example, in the UK these are called TUPE (Transfer of Undertaking Protection of Employment) and most of Europe has a similar application wherein the buyer must provide the same conditions of employment, pay, and benefits for the sellers’ employees.

Solving challenges that companies face during M&A assessments and preparation

Transitioning headcount will need a new, compliant infrastructure, potentially in several different counties.

Regulations for employee transitions and offers in carve-outs or spin-offs vary by country.

Conversely, companies in Asia Pacific and South America are more likely to manage acceptance arrangements during acquisitions. Employment contracts that are already in place demand intricacy when renegotiating. This adds another round of negotiations to the table and, if employees do not accept the new conditions, they will need to be given severance packages.

Be prepared for your next transaction1

5

Matching current benefits can prove near impossible for small groups of employees. Providers of insurance, memberships, and other benefits can’t always support cost-effective programs for small groups. Buyers will likely need a payroll vendor to understand insurance benefits, reductions, and benefit-in-kind taxation.

If the aim is to match employee benefits in a carve-out, they can be hard to re-establish and may add up to costs beyond the expected payment and benefits considered commonplace — professionals might have specific insurance, gym or club memberships, company cars, expense accounts, not to mention individual unusual benefits such as different holiday allowance, that were not disclosed initially. This is worth knowing before closing negotiations because it may affect the buyer’s offer or what the seller accepts. For all the above reasons, Globalization Partners carries out a Benefits Analysis for its clients before their M&A transactions begin. We provide even small transitioning teams with country-bespoke benefit packages based on local expectations and benchmarks. Beyond the standard packages that simply include pension and health, our offering covers a variety of further benefits and insurances, all in line with each country’s unique circumstances.

What is considered appropriate in each country? Should transferring professionals become employees of an Employer of Record or would it be better to set up a legal entity to employ those people?

How many employees need to be transferred per country? Does this number merit setting up subsidiaries?

What is each local market’s potential for growth? How can this be investigated with minimum risk?

Are we carefully preparing to preserve value during the international employee transfers?

Regulations for employee transitions and offers in carve-outs or spin-offs vary by country.

Management-level decisions to make pre-transaction

We help companies be prepared for international transactions.

Globalization Partners lets buyers and sellers focus on more important matters.

We provide custom benefit packages to match existing contacts and country-bespoke benefit packages based on local expectations and benchmarks, even for small transitioning teams.

Globalization Partners navigates the tax and compliance matters of hiring internationally so you can have peace of mind with a solution in place, in advance of deal negotiations.

We can answer questions on specific scenarios and provide a preliminary cost proposal based on expert global HR knowledge, so that both parties can estimate costs of employee transitions. This is also a method to investigate the challenges and strengths of each market containing transitioning employees.

The Netherlands, Germany, and France, among other countries, require pending M&A transactions to be communicated ahead of employee transfer to the relevant Workers’ Council. In fact, the council must have a say in the transaction before it goes forward, so informing ahead of time is crucial.

Visit Globalpedia for more country-specific analysis.

6

The time it takes to close a transaction can make or break a deal. Not to mention, no one wants to wait in limbo for months when they could be driving the growth of their business. Meet short deadlines and stay on track for deal close with Globalization Partners’ EOR solution, and get your M&A transactions done faster, cheaper, and compliantly. We’ve guided buyers and sellers through the major headwinds detailed here.

Delays in transferring employees put the brakes on usual activities, distracting from the day-to-day tasks that keep your business on track.

Being able to meet TSA deadlines is crucial, needless to say. And in order to speed things up, being able to forego the need to keep employees on the seller’s payroll and benefits scheme can greatly reduce M&A admin. Also, if there is a TSA in place, buyers will have a hard stop on a certain date and will need to have a solution in place to hire people immediately so they can keep working while the decision-makers come to an agreement.

We can lower risk and take on the administrative burden, because buyers will have everything HR-related in one spot — our proprietary technology platform. Moreover, by handing employment responsibilities to a trusted partner, the buyer can focus on its own strategic development and ensuring the value of the new business. The emerging company structure should be the focal point for both buyers and sellers, not tax and operational concerns relating to global HR.

The transitioning employees will undoubtedly have questions too. They would usually have to navigate a new HR team, and coordinate with that team’s time zone. With our HR specialists, who are in-country and ready to help, transitioning employees can have all their questions answered without delay. Buyers and sellers must ensure sensitivity during transitions or risk putting employee engagement in jeopardy. Closing might go ahead on schedule, but team transitions don’t always. Employee engagement is hard to obtain if the transitioning employees are not transferred off seller’s payroll and into buyer’s offices (or at least into their virtual meeting rooms!). It may take months to set this up and result in stress for remaining

Around the world, high value transactions involving global teams mean companies must be assigned tax numbers in the countries their employees are based. In India, for example, this must be assigned by the Indian Income Tax Department before companies can hire locally. The permanent account number (PAN) is a ten-character alphanumeric identifier, issued in the form of a laminated PAN card and failure to comply incurs a financial penalty.

Visit Globalpedia for more country-specific analysis.

Transaction announced Stick to timelines and deadlines

2

7

employees for carve-outs, or disengagement, especially when teams abroad are small. Ultimately, this can become a disproportionately large problem for the number of professionals being transferred. Moreover, buyers acquiring a small subset of international employees likely don’t want the expense of setting up entities in new countries, not to mention the hassle and time-commitment involved in doing so. Using a Global Employer of Record solves this in a matter of days, not months, and also preempts the challenges of renegotiating benefits providers for smaller teams, using the Benefits Analysis and country-bespoke packages previously detailed.

Most worrying of all, transitioning employees may not voice their intentions to jump ship if their expectations are not met. No news is not necessarily good news. The risk of losing great talent, and with it the valuable market knowledge the buyer wants to acquire, is a real concern at this stage. Communicating with (not at ) transitioning teams is key to be able to predict potential loss and ideally, avoid it.

Designing an onboarding experience for specific cases, like carve outs or spin-offs, takes time and resources.

Even after contracts have been renegotiated and signed, employee disengagement is a possibility, so genuine sensitivity and informed professionalism must be observed as employees assimilate wholly new reporting lines, workspaces, performance goals and coworkers. Use a globally respected EOR will help you onboard people swiftly and comfortably, without adding yet another task to your internal team’s docket. Avoid disengagement by putting people first.

What experience do I want employees to have as they transition from one company to another?

How quickly do we need this done?

Do we have the expertise in-house to navigate transfers with sensitivity and with minimal impact on business?

How can buyers minimize risk and preserve value during international transactions?

Management-level decisions to make during international transactions

We help buyers and sellers complete global transactions faster.

Business as usual can continue while we take care of transitioning employees in 187 countries within days, not months.

Buyers stay in control of the new teams’ day-to-day.

Save resources on transactions because there’s no need to set up costly international subsidiaries with Globalization Partners’ solution.

Simplify your international workforce management with all employees on one platform.

8

Why stop global expansion now? It is unlikely you entered into a transaction without the intentions to explore fresh pastures, develop and launch new products, or to start something newer and bigger. You’ll need a partner you can trust post-transaction, and here are the primary concerns we have seen companies face after the fact.

Day-to-day HR matters such as expense reports, communicating holidays, emergency use of healthcare insurance, and so on, will need to be managed by the buyer’s current HR team, who may already be stretched thin.They will need to learn and navigate new processes, foreign customs and regulations every day, all while keeping up with the growing number of employees in their charge.

Private equity firms and their growth-stage clients may also be expanding internationally. The need to explore new markets, diversify and strengthen teams with the best talent has never been more necessary. Unfortunately, this requires specialist knowledge and a substantial time commitment that your existing team may not be able to commit. Globalization Partners can support their global hiring plan so you can focus on what matters to your business.

Post-transaction, the newly formed enterprise will be pipped to grow and therefore, will want access to the best people around the world. They’ll also want to focus on strategy and product development, not administrative efforts to get new members on payroll. Rather than solely using an EOR as a transitioning solution, both the seller and buyer can continue to rely on an international hiring partner for legal and HR compliance, hiring support and an outstanding onboarding experience around the globe.

Post-transaction, the buyer’s HR employees need to get up to speed on global people management.

The rest of your portfolio has ambition too, but you don’t have time to dedicate to supporting more companies.

When the acquired company inevitably grows, it needs to facilitate continued international hiring.

Transaction closed Keep the momentum

3

In many countries, including China and Japan, buyers must set up a local bank account in order to hire nationals. In general, this will require buyers to send an executive in person to open the account, and deposit a substantial amount of liquidity.

Visit Globalpedia for more country-specific analysis.

Another aspect that’s central to sound HR management — employee engagement — will still need to be monitored. It is important to ensure motivation doesn’t dwindle and be aware that any lack of transparency in terms of benefits, salary, or even days off can cause disengagement. Globalization Partners can provide your transitioning teams with the support and responsiveness they deserve.

9

What does the first 125 days look like once the company has been acquired? What will the hold period be: 1-3 years, 3-5 years? What is the goal of the acquisition?

How will the buyer manage the new team’s standard HR procedures? Do we have the capacity to take more administration on?

Are we certain we can remain compliant in all the locations where we’re absorbing employees?

Will the acquired entity consider hiring internationally at a later date? Do I have the bandwidth to guide them through this?

Management-level decisions to make during international transactions

We keep operations moving when the acquired company expands into new markets.

If you choose Globalization Partners as a stop-gap solution while setting up a legal entity, you can continue business as usual, so employees don’t lose momentum.

Alternatively, employees can remain on our entity long-term. You decide what’s best for your business and your people.

We can also help firms with their existing portfolio companies, which are hoping to expand quickly, with lower costs and total compliance assurance for you and your clients.

Venture capital associates know that their portfolio companies look to them for advice and value they can’t find anywhere else. When startups consider hiring in another country, in order to find the perfect talent for their specialty, they’ll hope you can suggest a solution. You and your clients can grow with us, because Globalization Partners speeds up transactions and is also a solution for rapid growth in new markets.

10

Onboarding 47 Employees Across Three Global RegionsHow we helped a private equity firm meet deadlines and focus on strategy:

One of the critical factors in every carve-out acquisition is time. Buyers are oper-ating on quick turnaround times, working to get all legal and financial frameworks in place so deals can unfold smoothly. On an international scale, the compli-cations only mount. A private equity firm came to us while in the process of a carve-out transaction with a multinational hardware manufacturer. In total, the firm was responsible for acquiring and onboarding 3,000 U.S. and international employees. While they were able to handle 98 percent of the employee popula-tion in-house, there was a small segment that presented a challenge.

47 of the new employees were in 14 different countries spanning three regions: APAC, EMEA and LATAM. Without entities already established and a deadline looming, we stepped in to assist.

We started by assessing all contracts and benefits for this group of international employees. Next, we recommended a country-by-country strategy to keep all employees whole in terms of benefits and compensation, including those under Transfer of Undertakings Protection of Employment (TUPE) legislation. Finally, we helped the client develop clear, thoughtful messaging explaining the new contract and transition plan for all the international employees they wished to retain.

Ultimately, our client was able to seamlessly retain talent during this trans-action, but most importantly, they were able to focus on the big picture, knowing their new employee population was in capable hands.

Stabilizing Employee Benefits in Less Than Six Weeks How we helped a joint venture launch with full benefits for transferring employees:

Dedicated, talented employees are often the core value of any carve-out. Retaining talent through deal close and beyond is critical. A private equity firm decided to enter into a joint venture with a major chemical manufacturer and both parties asked Globalization Partners to step in and aid with a key portion of the employee population.

As a condition of the deal, some of the manufacturer’s employees in Argentina and Brazil would move to the private equity firm. One of our clients’ key concerns was that employee benefits remain stable and consistent throughout the transition.

We began by providing extensive consultation to both sides of the deal throughout the pre-transaction stage and looked closely at the current benefits packages of all transitioning employees. After briefing both parties on the complexities of labor law in Argentina and Brazil, our clients elected to have us set up their employees through our subsidiaries, eliminating the need for the buyer to do so.

This saved a considerable amount of time and extensive costs. All employees retained full benefits and remain with us as their global Employer of Record.

11

Our Global M&A SolutionInspired by the diversity and resilience of our clients, Globalization Partners developed capabilities to support companies through M&As. We know carve-outs, mergers and acquisitions are part of business as usual for many of our partners and want to ensure global hiring doesn’t stand in their way.

We ensure speed to value while minimizing risks that could result in costly turnabouts, so you can have peace of mind and confidently execute cross-border transactions.

Your employee, our payroll. Buyers can hire globally in days, not months – sellers can transfer their headcount to the buyer, quickly and seamlessly.

Globalization Partners has extensive expertise in managing employee transition and retention, so that the buyer retains its human assets ondeal close.

Globalization Partners has the technical expertise to act as an extension of the buyer’s and seller’s teams to transition employees and get them on payroll ready for deal close.

Our team is very responsive to deadlines. We will go down to the wire to ensure that international employee offers are ready before the ink on the deal dries. By working closely with you, we’ll ensure that everything you need to move forward is set up on the day of the deal.

We work with you to make sure each individual understands and is happy with their new employment situation.

Buyers can offer competitive benefits packages to retain talent and stay compliant with all local labor laws.

Globalization Partners has the largest team of in-house employment attorneys to recommend risk management strategies around employment contracts, especially when dealing with countries subject to TUPE.

Don’t risk losing intellectual property to contractors or short-term contract workers. We ensure you own all IP your employees create.

In terms of new hires, we are the most trustworthy solution in the market due to our country-specific, local expertise.

Transfer headcount with no entity setup required. Buyers can offer employment contracts in 187 countries and our HR experts handle the transition.

Globalization Partners provides country-by-country guidance on comparable benefits for the transitioning employees and can match benefits packages like-for-like, even for small teams.

Globalization Partners assists with effective messaging to help settle employees and maximize human asset retention.

We manage a resign and rehire model in the spirit of the TUPE regulation (Transfer of Undertaking Protection of Employment, detailed in the “Be prepared for your next transaction” section of this guide).

Meet TSA timelines Retain human assets and ensure compliance

Onboard without a local entity

12

Globalization Partners’ online Help Center gives professionals instant access to our services and resources. They can submit queries and requests, which are routed directly to the appropriate specialist. Our teams work around the globe and around the clock to ensure prompt responses for your employees. The Help Center also provides access to online information in case they prefer to independently access resources.

Our technology provides your transitioning team with a self-service tool – available anywhere, anytime:

Our team carries out a Benefits Analysis before M&A transactions begin. Globalization Partners provides transitioning teams with country-bespoke benefit packages based on local benchmarks. Beyond the standard packages that simply include pension and health, our offering covers a variety of further benefits and insurances, all in line with each country’s unique regulations.

Round-the-Clock HR Help

Self-Service Technology

Benefits Analysis

Initiate changes to employment terms and conditions, such as pay changes.

Instruct special payments such as commissions, bonuses and allowances.

Access a ‘time and expenses’ self-service solution to track hours if legally required, submit expense claims and record absences.

Come out on top: Join forces with Globalization Partners for M&A Transactions

Offer employment contracts in 187 countries in minutes

24/7/365 premium support services

Rapid onboarding process

Tap into extensive experience in large multi-country transactions for clients ranging from mid-cap to Fortune 100 companies.

No entity? No problem. Achieve a smooth and timely acquisition of your new employees.

Our solution will act as a bridge to house teams either until they’re moved to a newly created subsidiary in the specific country, or they decide to remain on the Globalization Partners’ platform indefinitely.

In the specific country, or a handful of employees, which can remain on the Globalization Partners’ platform indefinitely.

Your newly acquired employees will continue to get benefits packages based on local expectations and benchmarks.

Focus on what you do best to be successful.

13

Globalization Partners alleviates the burden of employee transfers with end-to-end HR services. Before, during, or after transaction close, we can confidently provide a roadmap for buyers and sellers. Our centers of expertise cover everything you need to hire compliantly.

As part of our comprehensive Employer of Record solution, our HR process and policy solutions support teams managing international transactions across the board.

Operational expertise for global transactions – transitioning employees

Centers of Excellence

14

Our In-House Leaders in M&A

We have a team of experts dedicated to supporting global transactions.

Can we help you speed time to valueon your next transaction?

globalization-partners.com

North America: info@globalization-partners.comEurope, Middle East, and Africa: info-emea@globalization-partners.com

Asia-Pacific: info-apac@globalization-partners.com

GET IN TOUCH WITH US TODAY