Puigverd Assessors analyzes and explains what it is and what happens when a succession of companies occurs

Business succession is a very common situation that occurs in the business world, whether through a merger, acquisition or transfer of a company.

When this occurs, it is essential to understand the concept of business succession and the implications it entails. The Puigverd Assessors team analyzes and explains what a succession of companies consists of, its main characteristics and how legislation, in particular the Workers' Statute , plays a fundamental role in protecting the rights of the workers involved.

Definition of Business Succession

Business succession refers to a process in which ownership of an economic entity is transferred from one owner or group of owners to another.

This transfer may result from a variety of circumstances, including mergers, acquisitions, sales or transfers. However, what is essential for it to be considered a succession of companies is that the economic entity in question maintains its identity, that is, its distinctive character and its ability to operate as a coherent organizational unit.

In other words, business succession does not only involve the transfer of assets and liabilities, but also the organizational structure, human resources, operating procedures and, in many cases, corporate culture. This ensures that the economic entity can continue to operate efficiently and without significant interruptions.

Main characteristics of Business Succession

• Identity Maintenance: Continuity in the identity of the economic entity is the key characteristic of business succession. This means that, despite the change in ownership, the company continues to operate under the same organizational structure and with the same essential resources.
• Labor Rights and Obligations: The labor rights and obligations of the workers are also automatically transferred to the new owner. This implies that workers maintain their employment contracts, benefits and seniority in the company, thus preserving their stability and working conditions.
• Protection of Workers: One of the crucial aspects of business succession is the protection of workers' rights. In many countries, such as Spain, labor legislation, such as the Workers' Statute, establishes safeguards to ensure that employees are not harmed by the change of ownership. These protections include non-discrimination, preservation of benefits, and continuity of employment contracts.
• Information and Consultation: Workers have the right to be informed and consulted about any significant changes that may affect their working conditions as a result of the succession of companies. This allows employees to participate in the process and express their concerns.
• Joint and Several Liability: In many legal systems, the old owner and the new owner are jointly and severally liable for the labor rights of workers for a given period. This ensures that in the event of default by the new owner, workers still have legal avenues to seek protection and compensation.

Business succession is an inevitable phenomenon in the constantly evolving business world. As companies change hands, it is crucial to ensure that workers' rights and working conditions are adequately protected.

The concept of business succession, together with labor legislation, such as the Workers' Statute in the case of Spain, plays a vital role in ensuring that this transition is carried out in a fair and equitable manner for all parties involved.