By Amit Acco, Partner |

We frequently receive requests to conduct the due diligence process for Israeli companies during negotiations for complete or partial acquisitions. In this article, we will emphasize the significance of due diligence, with a particular focus on the immigration component within Israel.

Due Diligence: Outlook

Due diligence refers to the process of conducting a thorough investigation or research on a company or business before entering into a financial transaction, such as a merger, acquisition, investment, or partnership. It is a critical step to assess the company’s financial health, operational performance, legal compliance, potential risks, and other relevant aspects.

During the due diligence process, various departments or individuals may be involved, including legal advisors, financial analysts, accountants, and industry experts. The goal is to gather comprehensive information and insights about the company to make well-informed decisions and identify any potential issues that could impact the transaction or partnership.

The scope of due diligence can be extensive and may include

  • Financial Due Diligence: Examining financial statements, balance sheets, income statements, cash flow, and other financial data to assess the company’s financial health and performance.
  • Legal Due Diligence: Reviewing contracts, licenses, permits, litigation history, and legal compliance to ensure the company is operating within the boundaries of the Israeli law, including Immigration legal review.
  • Commercial Due Diligence: Analyzing the company’s market position, competitive landscape, customer base, and growth potential.
  • Operational Due Diligence: Assessing the company’s operational processes, efficiency, and potential risks.
  • Environmental Due Diligence: Investigating any potential environmental liabilities and compliance with environmental regulations.
  • Human Resources Due Diligence: Evaluating the company’s workforce, employee contracts, key personnel, and HR policies.
  • Intellectual Property Due Diligence: Examining patents, trademarks, copyrights, and other intellectual property assets to assess their value and protection.

By conducting due diligence, potential buyers or partners can better understand the company’s strengths, weaknesses, and potential risks, helping them make informed decisions and negotiate better terms for the transaction or partnership. Similarly, it allows the company being evaluated to identify areas of improvement and address any potential red flags before engaging in the transaction.

Due Diligence of Legal Immigration affairs  in Israel

When conducting due diligence on an Israeli company in terms of legal immigration, there are several key aspects that should be checked to ensure compliance with immigration laws and regulations. Here are some important points to consider:

  • Work Permits and Visas: Verify that the company’s foreign employees, including executives, workers, and any other staff, hold the necessary work permits or visas to legally work in Israel. Each foreign employee should have the appropriate authorization based on their job role and duration of stay.
  • Employment Contracts: Review the employment contracts of foreign workers to ensure they align with local labor laws and contain the necessary clauses related to work permits, visa sponsorship, and other immigration-related matters.
  • Sponsorship Obligations: Understand the company’s obligations as a sponsor for foreign workers. In Israel, employers are typically responsible for sponsoring work permits and ensuring compliance with visa requirements on behalf of their foreign employees.
  • Compliance with Regulations: Ensure that the company adheres to all relevant immigration laws, regulations, and guidelines set forth by the Israeli authorities. Any non-compliance could lead to legal issues for the company and its employees.
  • Duration of Stay: Verify that foreign employees are not exceeding the allowable period of stay on their visas and work permits. It’s essential to track expiration dates and handle necessary extensions or permit renewals.
  • Workforce Composition: Assess the overall composition of the company’s workforce to determine the ratio of local employees to foreign workers. Some countries have specific requirements or limitations on the number of foreign employees a company can hire.
  • Immigration Policy Changes: Be aware of any recent or upcoming changes to Israeli immigration policies that may affect the company’s foreign workforce. Immigration regulations can change, and it’s crucial to stay updated on any amendments.
  • Compliance Record: Check the company’s past compliance record with immigration authorities to identify any previous issues or violations related to employing foreign workers.
  • Immigration Consultants: If the company engages immigration consultants or legal representatives to handle immigration matters, ensure that they are reputable and experienced in Israeli immigration laws.
  • Document Verification: Validate the authenticity of work permits, visas, and other immigration-related documents for foreign employees.

7 Good Reasons why retaining Kan-Tor & Acco for the Immigration Due Diligence in Israel 

Retaining a knowledgeable immigration law firm like Kan-Tor & Acco to handle the immigration part of the due diligence process is of utmost importance for several reasons:

  1. Expertise and Experience: Immigration laws and regulations can be complex and subject to frequent changes. A reputable immigration law firm such as Kan-Tor & Acco possesses extensive expertise and experience in navigating these laws. Their team of specialized attorneys can identify potential immigration-related risks, opportunities, and compliance issues during the due diligence process.
  2. Compliance and Risk Mitigation: Ensuring compliance with immigration laws is crucial for any company looking to acquire or merge with another business. Failure to comply can lead to severe consequences, such as fines, penalties, and even the disruption of business operations. Kan-Tor & Acco can conduct a thorough review of the target company’s immigration records and practices, mitigating any potential risks.
  3. Assessment of Workforce: During the due diligence process, it is essential to evaluate the target company’s workforce, especially when the deal involves key employees, executives, or specialized talent. The immigration law firm can assess the immigration status of employees and verify whether they are legally authorized to work in Israel.
  4. Addressing Potential Liabilities: Identifying immigration-related liabilities before completing the acquisition or merger is crucial. Kan-Tor & Acco can identify and advise on any pending immigration-related litigations or issues that might affect the target company’s operations or reputation.
  5. Optimization of Immigration Strategies: A proficient immigration law firm can suggest strategies to optimize the immigration status of the acquired workforce, ensuring smooth post-acquisition integration and a seamless transition.
  6. Speed and Efficiency: Engaging an experienced immigration law firm streamlines the due diligence process, saving valuable time and resources. They can quickly assess the immigration aspects and provide timely reports to facilitate the negotiation process.
  7. Comprehensive Perspective: As a part of the due diligence team, Kan-Tor & Acco can collaborate with other legal and financial experts to offer a comprehensive perspective on the target company’s immigration compliance and potential implications on the overall transaction.

In summary, partnering with a knowledgeable immigration law firm like Kan-Tor & Acco ensures that the immigration component of the due diligence process is executed diligently and thoroughly, safeguarding the interests of the acquiring company and facilitating a successful transaction.