The Stakes are Higher than Ever for Policy Review During Due Diligence

Are you prepared for allegations of harassment or discriminatory misconduct?  The headlines of the past two weeks have made it abundantly clear that the rules of the workplace continue to shift in significant ways.  From the announcement that Leslie Moonves was stepping down at CBS to the recent sexual assault allegations against SCOTUS candidate Brett Kavanaugh, the #metoo movement continues to make headlines and impact board rooms.  

The specter of harassment and discrimination looms over organizations large and small, and can have serious implications in the context of deal making.  In a January 10, 2018 podcast episode of Deal Junkie, Kevin Fechtmeyer, Managing Partner, Cave Creek Capital Management LLC asked “What happens if you have a really talented manager and you learn that he [or she] is having an affair with an employee?”  Quinn Williams, Shareholder, Greenberg Traurig LLP replied, “These situations do arise...surprisingly few companies have policies about fraternization.”  If it’s a superior/subordinate relationship you must make a shift and perhaps terminate one or both parties.  “That hurts the value of the company.  Nobody is going to buy a company that has the potential for a sexual harassment claim.”

“...[Co]rporate boards and managers need to wake up to the reality that sexual harassers, no matter how important they seem, do incredible harm to their companies. They desiccate a culture, draining employees’ motivation. They push qualified employees to leave. And they make their companies vulnerable to a backlash when the problems eventually come to light”, said Bryce Covert in her August 3 New York Times article.

“The old ways of addressing harassment and claims no longer work.”  Patricia C. Collins, Esq., an employment attorney with Antheil, Maslow & MacMinn, LLP, says that “employment lawyers are scrambling to address harassment and discrimination claims in light of the #metoo movement.  Gone are the days where they could provide employer clients with formulaic policies and rest their heads knowing their clients are safe.   The #metoo movement tells us that we have gotten too comfortable, and it is time to get creative about managing the legal risks of harassment and discrimination in the workplace.” You can read Patty’s complete advice in our April 2018 blog post.

Preparations for deal making, as a buyer or as a seller, should include a comprehensive review of non-discrimination, non-harassment, fraternization, and related policies.  Be certain to ask about pending litigation and explore interpersonal relationships within the workplace as part of your due diligence process. Rely on trusted advisors and experts to help guide you along the way.  The stakes are high, indeed.

We would love to talk to you about these and other ways to improve your deal-making outcomes.  Give us a ring or drop us a note at info@29Bison.com.