Immigration Compliance Critical in M&A Transactions as Deal Structure Determines Sponsorship Requirements

In merger and acquisition transactions, buyers and sellers frequently operate under the mistaken assumption that immigration status automatically transfers between entities, but U.S. work visas remain employer-, job-, and location-specific. The legal structure of the deal fundamentally determines immigration compliance requirements, with stock deals generally maintaining sponsorship continuity while asset deals often require new immigration filings. The successor-in-interest doctrine under U.S. immigration law becomes critical when determining whether a new employer can assume the immigration sponsorship obligations of the prior employer following a transaction.

Stock deals involve purchasing the company as a legal entity, meaning the employer identification number remains unchanged and the legal employer on visa paperwork stays the same. While job titles, locations, and compensation may change later, the employer entity remains consistent at closing, typically eliminating the need for amended immigration filings solely due to ownership changes, provided no material changes occur to job duties, location, hours, or wages. Asset deals, however, involve purchasing business assets and hiring employees into a new or different employing entity that was not the original immigration sponsor, requiring comprehensive immigration analysis and strategy development before the first day of new employment.

The distinction between deal types carries significant practical implications for compliance. Any transaction that changes worksites or job duties can trigger regulatory action, requiring new Labor Condition Application filings and worksite postings. Remote and hybrid work arrangements still constitute worksite changes under immigration regulations, with the employee's actual work location driving compliance requirements. H-1B and E-3 visa holders commonly require new LCA filings and petition amendments if their primary worksite changes to a new area of intended employment, while L-1 visa amendments become necessary if job duties or levels shift meaningfully. Failure to properly notify agencies or update filings can result in Requests for Evidence, petition denials, or complete loss of work authorization for affected employees.

I-9 and E-Verify compliance also diverges significantly based on deal structure. Stock deals maintain the same employer entity, eliminating the need for new I-9 forms solely due to the transaction, with only employees possessing expiring work authorization requiring reverification. Asset deals require buyers to either obtain and maintain the seller's existing I-9 forms or complete new I-9 documentation within three business days of each employee's start date with the new entity. E-Verify systems must be updated to reflect any name or FEIN changes, and if transitioning to a new account, careful planning ensures new hires are created under the correct entity from day one.

Practical compliance steps include confirming the deal structure, building comprehensive rosters of foreign national employees during due diligence, mapping Labor Condition Applications to actual worksite realities, preparing assumption of immigration obligations documentation, sending post-closing notices for pending USCIS cases, updating E-Verify and HRIS profiles, and developing clear communication plans for affected employees. Following these steps helps identify compliance gaps, mitigate risks of status interruption, and facilitate necessary remedial actions before or immediately after closing, while ensuring all communications remain consistent with anti-discrimination laws by avoiding singling out foreign national employees or making assumptions about their immigration status.