Verify level of employee involvement prior to settlement
May 17, 2024
by a searcher from University of Maryland at College Park in Brooklyn, NY, USA
Hey guys, how do you confirm the level of involvement of an employee in a business during due diligence? I got a business where the owner is saying his uncle and dad don’t really work much in the business but are currently there every day and from my visit, it looks like they have meaningful contributions. Anyway to confirm this type of thing?
from University of Pennsylvania in Philadelphia, PA, USA
- Are these two on the payroll or getting paid some other way?
- Also, I wonder why the owner is saying they are non-participants (what is his motive?)
It would be one thing for him to say they will not be participating after the close but another to say they are not participating currently when you feel they are. Also, you should ask them if they have job descriptions (these should exist for anyone working there to ensure proper training and accountability). Are they critical path for any deliverables where their lack of involvement might adversely affect the success of a process, project or the company itself? If they are involved with a process, is this process documented somewhere? Are these guys either designing processes, managing them or executing them - or all of the above?
Answering these questions can go a long way towards determining their involvement and their importance to the future of your acquisition. Good luck! E-
from New York University in New York, NY, USA