Due Diligence Reviews: Immigration Risk in M&A
In any merger, acquisition, or corporate restructuring, hidden liabilities can derail a deal. Immigration compliance is a critical but often overlooked area of risk. A target company’s failure to properly manage its foreign national employees can lead to significant fines, loss of key talent, and post-transaction chaos. At The Law Offices of Luke Bowman (LBL), we conduct thorough immigration due diligence to help Michigan businesses identify and mitigate these risks, ensuring a smooth transition for your company and its employees.
Protect your deal from unforeseen immigration liabilities.
Overview: Why Immigration Due Diligence Is Critical
Immigration status is directly tied to the sponsoring employer’s corporate structure. When a company’s structure changes through a merger, acquisition, or reorganization, the legal basis for its foreign employees’ work authorization can be impacted. Without a proactive review, both the buyer and seller face significant risks, including:
- Financial Exposure: Inheriting fines from the target company’s past I-9 errors, Public Access File (PAF) violations, or other compliance failures.
- Talent Loss: Key foreign national employees may lose their work authorization if their visa petitions are not properly amended, leading to business disruption.
- Operational Gaps: An employee’s work authorization could be interrupted, forcing them to stop working while post-transaction filings are sorted out.
Immigration due diligence is not just a formality; it is an essential step to protect your investment, retain critical talent, and ensure business continuity.
What We Review
Our due diligence process is a comprehensive and confidential examination of the target company’s immigration posture. We analyze every angle to provide a clear picture of your potential risks and obligations. Our review includes:
Employee Immigration Status
A full audit of all nonimmigrant and immigrant employees to verify their current status and work authorization validity.
Pending Immigration Filings
An analysis of any pending petitions, applications, or green card processes that could be affected by the transaction.
LCA & Public Access File (PAF) Compliance
A deep dive into the target’s H-1B records to check for compliance with Department of Labor (DOL) wage and posting obligations.
Worksite and Location Compliance
Verification that visa petitions match the actual worksites of employees, a common point of failure.
Sponsorship-Related Liabilities
Identification of dependencies tied to third-party vendors or end-clients that could complicate post-transaction employment.
Corporate Changes That Require Review
Nearly any significant change in corporate structure can trigger the need for new or amended immigration filings. We provide guidance on events such as:
- Mergers and acquisitions (stock, asset, and other deal types).
- Changes in ownership or corporate control.
- Internal business restructuring or reorganizations.
- Official company name changes.
- Corporate relocations or the addition of new worksites.
- “Successor-in-interest” analyses to determine if the new entity can assume the prior company’s immigration obligations.
Your Due Diligence Deliverables
Our process concludes with a clear, actionable report that empowers your deal team to make informed decisions. You will receive:
Written Immigration Compliance Report
A confidential, privileged report detailing our findings, risk analysis, and potential financial exposure.
Status Summaries for All Visa Holders
An organized census of all foreign national employees, their status, expiration dates, and required post-transaction actions.
Recommended Corrective Actions
A prioritized list of steps to remediate any identified compliance issues, with clear timelines.
Post-Transaction Compliance Plan
A strategic roadmap for all required immigration filings, employee communications, and integration tasks.
Integration Checklist
A practical tool for your HR team to manage the transition of sponsored employees smoothly after the deal closes.
How We Help
We act as a seamless extension of your deal team, providing rapid and practical immigration expertise from initial assessment through post-closing integration.
Protect Your Business
We identify and quantify immigration liabilities, allowing you to negotiate protections and avoid inheriting costly problems.
Ensure Employment Continuity
We create a clear plan to ensure foreign workers remain legally employed without interruption.
Coordinate with Stakeholders
We work directly with your HR, legal, and executive teams to ensure everyone understands the immigration implications of the transaction.
Manage All Filings
Our team handles the preparation and filing of all necessary petitions, amendments, LCAs, and notices to government agencies.
Rapid Triage and Remediation
In fast-moving deals, we quickly identify the most urgent issues and deploy solutions to keep the transaction on track.
Frequently Asked Questions
Will immigration compliance problems stop a merger or acquisition from closing?
Not necessarily. Many immigration issues can be identified and addressed during the due diligence process. However, significant compliance failures, unresolved work authorization concerns, or substantial government liability exposure may affect deal negotiations, transaction timing, or post-closing obligations.
How far back should immigration records be reviewed during due diligence?
The appropriate review period depends on the size of the workforce, the company’s immigration history, and the scope of the transaction. In most cases, employers should evaluate both current compliance practices and historical immigration records to identify potential liabilities and recurring issues.
Are I-9 violations transferred to the acquiring company?
Potentially. Depending on the structure of the transaction and the legal relationship between the entities, an acquiring company may inherit certain immigration-related liabilities. Identifying and quantifying these risks before closing is an important part of the due diligence process.
What happens if key employees require visa sponsorship after the transaction?
Foreign national employees may require updated immigration filings to maintain valid work authorization following a merger, acquisition, or restructuring. Early planning helps reduce the risk of disruptions that could affect critical personnel and business operations.
Can immigration issues affect company valuation?
Yes. Unresolved immigration compliance concerns can create financial exposure, increase legal costs, delay integration efforts, and place important employees at risk. These factors may influence negotiations, indemnification provisions, and overall transaction value.
Should immigration counsel be involved before a letter of intent is signed?
In many transactions, early immigration review can help identify potential concerns before significant resources are invested in the deal. This allows buyers, sellers, and advisors to understand immigration-related obligations and address risks proactively.
How are remote employees impacted during a corporate transaction?
Remote and hybrid workers can create additional compliance considerations, particularly when visa holders are working from locations not covered by existing immigration filings. Reviewing worksite locations is an important part of evaluating post-transaction compliance requirements.
What should employers do if they discover immigration compliance issues during due diligence?
The first step is to assess the scope of the issue and determine whether corrective action is available. Many compliance concerns can be addressed through remediation efforts, updated filings, policy improvements, and post-closing compliance planning.
Are employment-based green card cases affected by mergers and acquisitions?
They can be. Pending PERM labor certifications, immigrant petitions, and adjustment of status applications may require additional analysis following a corporate transaction. The impact depends on the structure of the deal and the employee’s stage in the immigration process.
Why is immigration due diligence important even when a company has only a few sponsored employees?
A small number of sponsored employees can still create significant operational and compliance risks if their work authorization is affected by the transaction. Reviewing those cases before closing helps protect key personnel, avoid disruptions, and ensure continued compliance after the deal is completed.
Secure Your Transaction from Immigration Risk
Don’t let immigration compliance issues jeopardize your next corporate transaction. Contact LBL for a confidential consultation on your due diligence needs.
Contact us today to schedule a consultation.
Call: (810) 522-5405
Email: [email protected]