Download: M&A Immigration Guide for Employers

If your company just closed on an acquisition, do you know whether your foreign national employees’ immigration status survived the deal?

Human resources and deal teams might assume this question is addressed during due diligence. But even if financial statements, contracts, and intellectual property are checked line by line before a deal closes, immigration status often isn’t.

Status doesn’t always carry over in a merger. It depends on how the acquisition was structured, and how the change was documented.

How does deal structure affect immigration?

When one company buys another, when it comes to immigration, the question is whether the new company has a legal right to the old company’s pending and approved petitions. Can the new company step into the old company’s shoes for cases already in progress and avoid being required to file new petitions? That’s called being a “successor-in-interest.” If the successor-in-interest can’t be established, U.S. Citizenship and Immigration Services or the Department of Labor may not recognize the new company’s claim to the old company’s pending or approved cases. The consequences differ by case type, from amended filings to starting the process over.

Successorship risk means how likely USCIS or the DOL is to reject the acquiring company as the seller’s substitute. How much risk you face depends on the deal type:

• A stock purchase keeps the same legal entity in place, even though ownership changes. This tends to carry the lowest risk.
• An asset purchase, or the purchase of one business unit, may create a new employer relationship. The old obligations have to be expressly assumed in the closing documents, or risk goes up.
• A corporate reorganization or spin-off can trigger the same analysis, even without a traditional “acquisition.”

How does a merger affect employee travel?

A merger doesn’t just change who signs the paychecks. It can also change how an employee’s travel documents work.

Picture an H-1B employee crossing the border a week after your deal closes. Their status is valid and the successor filing was done correctly. But their documents still name the prior company, which no longer exists on paper.

The border officer reviewing those documents may not recognize how successor-in-interest rules apply, or why the company name on the employee’s papers doesn’t match the one they actually work for now.

The mismatch can lead to extra questions, delays, or even a trip to secondary screening for that employee.

Solid documentation doesn’t erase every risk at the border. But giving the employee something that explains the transaction in plain language may lower the odds of the problem. (More to come on this.)

What should HR and deal teams check after a merger?

There’s a four-step process to work through after a merger closes:

1. Confirm whether the employing entity changed. A stock purchase often keeps it the same, but other deal types don’t.
2. Check what changed for each employee: title, pay, work location, or manager. A small shift can require a new filing.
3. Establish and document successor-in-interest status in writing.
4. Match the right playbook to each case type. H-1B, L-1, PERM, and I-140 cases run on different deadlines and call for different paperwork.
5. Have the company’s immigration counsel prepare a successor-in-interest letter documenting the transaction and explaining its immigration consequences, which can be provided to U.S. Customs and Border Protection or other immigration authorities when needed.

But there’s no one checklist. Each employee’s situation and visa type is different. The deal structure is another complicating factor. That’s why every case requires its own review.

What’s the cost of getting this wrong?

Getting this wrong is more than just a compliance issue. It can cost you the people your company just paid to acquire if they lose their work authorization. In addition, foreign national employees who feel uncertain about their status mid-integration could be at greater risk of being hired away.

A clear, documented plan protects the company and the people in it.

Manifest attorney Ana Gabriela Urizar has prepared a full M&A Immigration Guide for Employers. It breaks down risk by deal type, lays out action items for H-1B, L-1, PERM, and I-140 cases.

Plus, it includes a sample travel letter for employers crossing the border after a deal closes.

Download the full guide by filling in the form below.

Disclaimer. This article is for general informational purposes only and does not constitute legal advice. Reading it, or contacting Manifest Law through this site, does not create an attorney-client relationship. Immigration law changes frequently, and the information here is current only as of the publication date. For advice on your specific situation, consult a licensed attorney. Prior results do not guarantee a similar outcome. This communication is attorney advertising.