French companies must now inform employees of potential acquisitions

French companies must now inform employees of potential acquisitions


A law passed in France, which takes effect November 1st, will require companies with less than 250 employees to inform employees of any intention to sell the company (or a majority stake in the company). This law will certainly have a ripple effect to startups, where deals are often made fast and furious, with the biggest acquisitions in the past 3 years often happening in a matter of weeks.

Specifically, the law states that, two months before cession of the company, employees who have opted in to be informed about such activity must be informed of the intent or pending action. While it’s not clear whether a workaround to this may include signing a deal that takes effect two months down the road, it certainly could make things difficult – a close friend of mine recently, in trying to have his company acquired, so one buyer walk away due to employee response to the buyer in question.

Employees who opt in will have to sign a confidentiality agreement, and, if they are not properly informed, may take action no more than two months after said cession is official. In taking action, they can potentially overturn the acquisition decision in court – I really can’t wait for the first example of that to come into play.

Keeping high-level decisions out of prying ears can be tough – the law seems to imply that only employees who actively announce their desire to remain informed must be informed, however it’s hard to tell what precedent this law might set for future legislation.

Startups move fast, and pitching your acquisition to your investors, your board & your cofounders is hard enough without having to make sure your employees are on board.