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Why do you need to trim the workforce after a merger?

On Behalf of | Feb 19, 2024 | Business Law

If your business is going through a merger, you are hoping that the two companies will be better once they are combined than either one would have been on its own. The merger is equally beneficial for both businesses, and they can both see new levels of success in the future.

At the same time, though, a merger often means that it is time to trim the workforce and cut some positions. But why is this? If the merger is making the company stronger, why do you have to reduce the amount of employees you have at the same time?

Eliminating redundancy

The problem here is just redundancy, in that some of the jobs will be duplicated. These positions likely need to be eliminated just because they may have been necessary for two independent companies, but they are not necessary for the single entity that exists after the merger.

For example, maybe both companies have their own accounting division. In the future, the business will only need to have one accounting division, and it doesn’t need to be twice as large as it was before. The divisions may be combined or the workers from one may be let go.

This can also happen with creative positions. Maybe both companies have lead product designers. Will these designers be working together moving forward, or should only one person be in charge of the product design team? You have to consider what will be best for your company structure moving forward.

These are just a few of the things to consider as your business goes through a merger. Make sure you know exactly what legal steps to take.