3 Ways to Structure Employee Transitions in Asset Carveouts

Getting a deal signed is just the start. The real challenge begins when people are part of the asset.

Global M&A deal values rose 15% between early 2024 and 2025, even as total volumes dropped 9%. Fewer deals, higher stakes. Execution now matters more than ever, especially for employees caught in the carveout.

When a deal involves an asset carveout, employment transitions don’t always happen automatically. Employees may need to transfer or be rehired under a new legal structure. Delay that step and you risk losing key talent, breaking local employment laws or disrupting operations on day one.

The key lies in two connected elements:

• Transfer Mechanism: how employees move from seller to buyer.
• Employment Structure: where they’re housed (EOR, NRP or entity).

Each path has its own legal rules, timelines and risks.

Statutory transfers: where the law governs the move

In the UK and much of Europe, Transfer of Undertakings (Protection of Employment) regulations—known as TUPE—protect employees in business transfers.

Similar laws exist across Europe, each with local nuances.

When these frameworks apply, employees automatically move from seller to buyer. Their terms and conditions remain the same.

Statutory transfers typically apply when:

• The asset purchase includes ongoing business activities.
• There’s a service provision change (outsourcing or insourcing).
• Employees are assigned to the transferred asset.

If you’re only buying IP, equipment or non-operational assets, TUPE doesn’t apply. In that case, you decide how to engage the employees involved.

A recent change simplified TUPE consultation requirements for UK micro-businesses with fewer than 10 employees. It’s a welcome adjustment, but it doesn’t remove wider European obligations. These include employee consultation, redundancy processes or works council involvement.

Overall, statutory transfers provide structure and legal clarity, but they also restrict flexibility. Buyers inherit existing employment terms. Changing them can spark legal disputes or employee resistance.

Resign and hire: the voluntary transition

When statutory transfers don’t apply, or when buyers want more control, employees can resign from the seller and join the buyer directly.

This “resign and hire” model is common in markets without transfer laws. It offers flexibility but requires careful handling.

Best suited for:

• Countries without statutory transfer rules.
• Asset-only deals where staff aren’t automatically transferred.
• Small employee groups where individual negotiations are manageable.
• Buyers seeking to change employment terms significantly.

Our approach: At GoGlobal, we start with a full review of each employee’s current package: compensation, benefits and contract terms. We help clients ensure every employee is made “same or better.”

This approach mirrors TUPE’s spirit without its legal constraints.

Key considerations:

• Tenure Recognition: We often preserve past service or adjust clauses tied to seniority.
• Benefit Alignment: We close any gaps with supplemental insurance, allowances or policy updates.
• Retention: Employees stay engaged when they see fairness.
• Compliance: Ensures the deal’s employee commitments are fully honored.

Resign and hire balances flexibility with fairness, protecting both business continuity and morale.

Terminate and hire: the clean break approach

Sometimes, the seller pays out notice and severance before the buyer rehires staff under new terms.

This creates a clean break and is often used when major restructuring is planned or transfer terms require it.

Use this approach when:

• The seller provides full termination payouts.
• Roles or terms are changing significantly.
• Benefit structures are hard to align.
• You need a clear separation between old and new employment.

The advantage:

• Buyers gain complete control.
• They can issue new contracts, set fresh start dates and align benefits without inheriting legacy terms.

Regional differences vary widely and every country has its own details to navigate. For example:

• UAE: Gratuity rules and transfer timing require precise coordination.
• Japan: Communication style and cultural expectations are key for employee acceptance.

Choosing the right employment structure

Regardless of which transfer mechanism applies, buyers must also determine the appropriate employment structure to house transferred employees:

The implementation framework

Every deal is unique, but this simple framework can guide planning:

Critical success factors

• Early Engagement: Involve transition experts during deal planning. It helps assess feasibility, flag risks and design better strategies.
• Comprehensive Analysis: Every employee transition needs a close look at local laws, contract terms, and timing.
• Local Expertise: Country-specific knowledge (like UAE gratuity or Japan’s employment culture) can make or break transitions.
• Integrated Approach: Hybrid strategies often work best. Start with EOR or NRP for speed, then move to full entity setup as operations stabilize.

Building for compliance and continuity

Transitioning employees in asset carveouts takes more than good intent.

It demands local insight, precise execution and cultural awareness.

The goal is simple: ensure compliance, maintain business continuity and protect your people.

At GoGlobal, we help our clients cut through complexity and manage transitions with confidence. This way, you can build teams that thrive long after the deal closes.

Contact us if you’re managing a cross-border asset carveout. We’re ready to help you navigate the complexities with clarity and confidence.