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The Colossal Importance of Background Screening in a Merger
1 year ago by Lamia Massaad

The Colossal Importance of Background Screening in a Merger

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If your company is purchasing or investing heavily in another company, then you will want to ensure that your investment will be a successful venture. To do this, you must conduct various due diligence checks to verify that there are no hidden issues that will cause problems down the road.

Potential issues include new employees that you will acquire as part of your new business. It is crucial to rescreen your new employees as part of your evaluation as they will have a significant impact on your business. Your employees will represent your company and your brand to the outside world, they also have access to sensitive information about your business, and you will also rely on their knowledge and expertise to help your business run successfully. 

Therefore, you cannot just assume that all your new workforce is trustworthy and honourable. Being able to trust that your personnel are reliable is vital, and employee screening services are essential to give you peace of mind. 

Why is it Important to use Employment Screening Services?

Re-screening is the process of regularly conducting background checks on employees to catch and deal with potential issues promptly. It is crucial to do this because employees can harm their companies by engaging in illegal behaviour at any time, regardless if they have not done so before. Most businesses will only perform a background check before they hire an employment screening company because that is the only time it is mandatory. And this typically depends on what industry you are from because each will have different screening policies.

Therefore, rescreening becomes even more crucial when the business owner has no data on the new employees they will acquire through a merger. It is risky to assume that because someone is still employed at a company that they are trustworthy and honourable. Especially since bad hires can be disruptive, cause co-worker dissatisfaction, lead to decreased productivity, and safety issues within the workplace. 

Here are some additional reasons why it is crucial to use employment screening services after a merger to rescreen your workforce.

  • The purchasing company already utilises a thorough background screening policy, but the purchased business may never have followed background screening procedures. 
  • The purchased company follows background screening procedures at the hiring stage, but they are not as extensive or thorough as the purchasing company.
  • The newly purchased company implements background screening at the time of hire, but the new employer is not informed of their new employees actions and behaviours since the merger date.
  • Avoid fines and damage to your reputation due to non-compliance and negligence during the merger process.

Which Employee Checks Should Management Rescreen

Purchasing companies will still consider the employees that work for the acquired business to be ‘new’ because they do not have updated and verified information on their education, qualifications or criminal background. 

To protect yourself from unknowingly bringing bad hires into your business, you must implement a consistent, coherent rescreening process for both your current and new employees. 

To do this, it is essential first to decide which screening checks are necessary, and this will vary depending on how detailed the newly obtained company’s background screening policy is and on the employees position. 

However, many businesses will choose to re-conduct education and employment verification, criminal history and local reputation checks as these are more closely related to how trustworthy an employee is and if they are likely to continue to be in the future. 

Some employers will eliminate employment and qualifications checks because typically, the original hiring company will have already processed and verified this information but updating criminal and local reputation checks is prudent.

Let us review what the necessary checks are from above:

Criminal Screening: This test reveals the employee's criminal history, including if they were involved in any felony convictions, violent crimes, embezzlement, or sex crimes. This test is vital because depending on your industry, you may not be able to hire specific individuals if they were involved in crimes that are directly related to their jobs, eg; healthcare, education, finance or security.

Local Reputation Investigation: Assessment of a person’s local reputation is conducted by speaking to industry peers, local journalists, former employers, colleagues or tutors. Whilst feedback should not be considered to be 100% reliable as it is based on hearsay, this investigation often brings to light matters which invite further in-depth investigation such as links to political parties, terrorist organisations or suspicions of corrupt practices so that these can then be proven or eliminated through further checks if required.

Boards and directors are critical, too.

During the rescreening process, most companies will likely focus on the entry-level staff rather than senior-level staff.

However, the directors and board of directors have the most critical roles within an organisation. Therefore, they have the most influence on a company and its direction. And because they can cause the most damage to your business's reputation, assets, and brand, it is crucial that you don't forget them during the rescreening process. Otherwise, you are putting your business at considerable risk.

Assistance with Background Checks in Mergers and Acquisitions

Mergers and acquisitions are a complicated and demanding process for even the most experienced investor. That is why, during this stressful time, business owners may often overlook conducting background checks and rescreening their new employees. 

Mitigate risk, protect your business, and ensure that you are following compliance regulations by choosing Cedar Rose for your background employment screening services.

Our comprehensive background screening and rescreening processes will protect your company from associations with known criminals, terrorists, sanctioned individuals, convicted or suspected money launderers or those with an undesirable or dishonest past, bad local reputation, or a history of adverse media. 

Many of our investigations and reports can be conducted across borders which means that we still have you covered even if the business you are purchasing is in another country. Furthermore, we comply with international laws such as the Anti Bribery Act and FCPA (Foreign Corrupt Practices Act) so you can remain confident that your business correctly follows compliance procedures.

For more information on our employment screening services and how we can help your business, give us a call today on +357 25 346630 or email info@cedar-rose.com

  • employee screening
  • mergers
  • employee checks
  • risk management

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