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Post-Merger Integration

Can we reduce salaries after a merger?

Unilaterally reducing salaries is difficult under Georgian Labor Code unless there is a substantial change in job function or mutual agreement with the employee.

What is the "TUPE" equivalent in Georgia?

Georgia has regulations on Transfer of Undertakings in the Labor Code (Article 48), protecting employees' rights and continuity of employment during business transfers.

Do we need to notify the Competition Agency?

If the merger meets certain turnover thresholds, you must file a notification of concentration and get approval before completing the integration.

How to handle redundant executives?

Redundancy requires a formal reorganization order, notice periods, and severance pay (usually 1 or 2 months' salary depending on notice) as per the Labor Code.

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Post-Merger Integration (PMI): Realizing Deal Value

Signing a Merger and Acquisition (M&A) deal is just the beginning. Real value creation starts after the deal closes, when two different organizations must form a single structure. Post-Merger Integration (PMI) is a critical stage where synergies are achieved, cultures are merged, and operational processes are harmonized. Statistically, the main reason for M&A failure is poorly managed integration. Legally, this involves merging subsidiaries, unifying employment contracts, re-registering licenses/permits, and consolidating contracts. In Georgia, where bureaucratic procedures can drag on, proper PMI planning is essential for business continuity.

Legal.ge offers professional support in the integration process. Our lawyers will help you manage legal risks during the transition period and ensure the smooth functioning of the new structure.

What Does Post-Merger Integration Service Cover?

The service covers all legal and administrative aspects of integration:

  • Corporate Structure Optimization: Liquidating or merging redundant subsidiaries to reduce costs.
  • HR and Employment Integration: Transferring employees to the new structure, reducing redundant positions in compliance with legislation, and harmonizing salary/bonus systems.
  • Contract Review: Updating existing agreements with clients and suppliers, executing assignments of rights.
  • Regulatory Matters: Re-registering licenses, permits, and authorizations to the new legal entity.
  • Intellectual Property Consolidation: Bringing brands, patents, and domains under unified management.
  • Compliance Unification: Extending internal policies (anti-corruption, personal data) to the merged company.

Common Scenarios When PMI is Necessary

Integration is critical in the following cases:

  • Acquiring a Competitor: When the goal is to increase market share and reduce costs (e.g., by combining administration).
  • Vertical Integration: When a company buys a supplier or distributor and needs to legally simplify the supply chain.
  • Cross-Border M&A: When a foreign company buys a Georgian company and wants to align local operations with global standards.

Georgian Legal Framework

The integration process must consider the Law on Entrepreneurs (reorganization procedures), the Labor Code (mass layoffs, changes in conditions), and the Civil Code (transfer of obligations). Labor rights are particularly important: the transfer of a business cannot be a direct ground for dismissing employees, which requires a careful approach during restructuring. Also, the transfer of licenses is regulated by the Law on Licenses and Permits, where the consent of the administrative body is often required.

Service Process Stages

Working with a specialist includes:

  1. Plan Development (Day 1 Plan): Creating a detailed integration plan to be activated immediately upon deal closing.
  2. Audit: Inventorying existing contracts and obligations.
  3. Execution: Preparing and signing legal documents (merger agreement, new employment contracts).
  4. Communication: Legal support for communicating changes to employees and counterparties.
  5. Completion: Registering the reorganization in the Public Registry.

Why Legal.ge?

A successful deal doesn't end with a signature. Poor integration destroys value. Legal.ge connects you with lawyers who understand the complexities of operational and legal integration. They will help make the merging of two companies a seamless and painless process. Turn synergy into reality with Legal.ge.

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