Buying a business or bidding for a contract? Check the people costs before you commit
Buying a business or winning a contract can create an exciting opportunity for growth. But the purchase price or contract value is only part of the picture.
The employees, their contractual arrangements and the practical demands of running the service can all affect whether the opportunity makes commercial sense.
HR due diligence should begin while you still have time to ask questions and review your assumptions.
Could TUPE apply?
TUPE protects employees in qualifying business transfers and certain changes of service provider, including some outsourcing, insourcing and contract changes.
It does not apply automatically to every acquisition or contract award. The transaction structure and the circumstances matter.
Before pricing a bid or planning an acquisition, establish whether employees could transfer and what responsibilities that would bring.
Look beyond the salary bill
A spreadsheet showing basic salaries will not give you the full picture.
Depending on the arrangements, your review may need to cover:
Contractual hours, overtime and allowances.
Holiday entitlement and outstanding leave.
Sick pay, benefits and pension arrangements.
Length of service and notice periods.
Collective agreements.
Outstanding grievances, disciplinary matters or employment claims.
Vacancies, absence levels and reliance on temporary staff.
Ask what information supports the figures and what remains unconfirmed. Missing information should become a question to resolve before you commit.
Can you deliver the contract at the price proposed?
A competitive bid needs a realistic staffing model.
Consider who will deliver the work, what cover is needed and whether management, training and mobilisation costs are included.
For example, if your bid assumes you can introduce your usual employment terms immediately, that assumption needs checking. Where TUPE applies, transferring employees have protections that can restrict changes linked to the transfer.
Winning work at a price that does not cover its delivery creates pressure from the outset.
Plan for the people as well as the paperwork
Employees will want to understand what the change means for their jobs, reporting lines and working arrangements.
Build time into your plan for the applicable information and consultation requirements, accurate employee information, payroll preparation and communication.
A clear handover also needs named responsibilities: who answers employee questions, who checks the records and who resolves outstanding issues?
How The HFactor can help
The HFactor supports employers with HR due diligence, TUPE preparation, consultation and workforce integration.
We can help you review the people information, identify gaps, test staffing assumptions and develop a practical transfer plan, working alongside your legal and financial advisers where needed.
With 35 years of HR experience, I understand how much the details matter when a commercial opportunity becomes an operational responsibility.
Thinking of buying a business or bidding for a contract? Speak to us before you commit.
Karen Lewis, Chartered FCIPD
The HFactor HR Consultancy
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