Acqui-hiring is a combination of acquisition and hiring, and it describes the process of acquiring a company not for its products and assets as is usually the case, but for its employees. It is a powerful recruitment strategy that has become increasingly common, particularly in the UK tech space.

Traditional talent acquisition can be a slow and costly process. It can be hard to attract the candidates with an entrepreneurial flair, and there are a growing number of workers who are no longer attracted by traditional corporate jobs.

Restrictive covenants can also make it difficult to hire individuals or teams from your competitors without considerable legal jeopardy and cost.

Acqui-hiring avoids these issues as the talent residing in a start-up can be acquired in one transaction. It can therefore be an incredibly effective way of quickly bringing in teams in their entirety in a way which preserves the value of the team.

So what are the key HR issues?

If you are acquiring the shares of the business, then TUPE is unlikely to apply on completion. This means there won’t be any obligation to inform and consult staff about the acquisition in advance. However, when planning an acqui-hiring it is vital to have a well-defined communication plan and retention strategy.

Whilst TUPE is unlikely to apply on completion, it’s not uncommon for acquiring businesses to complete the transaction, then dissolve the target company and absorb its employees, products and services into their own business.

In these instances, careful consideration does need to be given to TUPE, and when and if staff transfer. Particularly as TUPE gives employees the right to opt out of the transfer, which has the effect of bringing the employee’s employment to an end on the date of transfer.

Any post-completion TUPE transfer therefore needs careful planning and communication to ensure that the acqui-hired team doesn’t opt out of the transfer, and negate the benefit of an acqui-hire.

If you would like to discuss the HR issues arising on an acqui-hiring, please get in touch with us.