Why EORs are crucial strategic partners in global M&A

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Gino Peters

Written By:

Gino Peters

Reviewed By: Belinda E.

June 3, 2026 7:24 pm

Category Tag: News

The rise of remote work made international expansion much easier in recent years, but hiring abroad still comes with legal and administrative complexity, as every country has its own labour laws and payroll rules that must be followed. In addition, not many companies can open a new entity in every new market that they are expanding into. That is when the Employer of Record (EOR) solution comes in handy.

The EOR serves as the legal employer on paper, while the client company manages important activities related to the employees responsibilities and performance.

In this guide we will cover what an employer of record is, how it works in detail, how much it can cost and which business should consider an EOR solution.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third party service provider that legally employs a person on behalf of another company in the country where the employee officially resides. As an official employer the responsibilities of EOR include issuance of an employment contract, processing payroll and withholding taxes and necessary social security contributions, as well as preparation of offboarding documents or any documentation that need to be signed by the employer. In addition, EOR ensures the compliance with local labour laws and serves as a first point of contact for any legal disputes.

The client company that hired the employee through an EOR also has a list of responsibilities. As an Employer of Record does not have the visibility on operational activities behind the scenes a client company needs to provide direction and ensure proper team integration.

In simple terms, the EOR provider acts as a legal employer in the country of the employee’s residence, while the client company takes on day-to-day manager work.

Responsibility	Employer of Record (EOR)	Client Company
Employment contracts & any other official documentation
Payroll processing
Income tax & social security contributions
Compliance with local labour laws
Statutory benefits administration
Managing daily work and projects
Setting goals and performance expectations
Providing equipment and tools
Leading the employee’s team and workflow

Employer of Record solutions gain more and more popularity in the field of global expansion as they allow businesses to hire best candidates fast and easy while staying compliant with local employment regulations. More information about EOR service are available if you would like to understand more.

EOR Meaning

The term “EOR” is the abbreviation for Employer of Record.

Employer in this instance stands for the company that hires the employee and takes on duties related to it, such as onboarding and offboarding process, payment of wages and compliance with other legal requirements.

“Record” from the EOR perspective refers to official registration with government authorities. The name of the EOR provider is stated in all payslips and tax filings, and should also be listed by the employee in any documents where employer must be stated, such as mortgage or loan applications.

One might ask a question of why this legal structure exists. As it is not possible to provide an employment contract directly to a person that legally resides in another country, the business expanding abroad typically needs to establish a local entity. That involves legal registration, arrangement of local bank accounts and organisation of payroll structure, as well as compliance with local law.

EOR allows to simplify the global hiring and reduce administrative burden through their existing legal entity.

There are some other hiring models that can be confused with EOR.

EOR and PEO

Many sources online refer to EOR as “international PEO”, which may create confusion as these models have 1 important difference.

A Professional Employer Organisation (PEO) serves as a co-employer of a client company. In other words, a business must already have an established entity in the country. The hiring tasks are, therefore, shared between 2 companies, while legal liability stays only with the client company. In the EOR model all legal risks are being taken by the official employer. Read more about the difference between PEO and EOR here.

EOR and staffing agency

Staffing companies mainly provide assistance for short-term projects by providing temporary workers. If the client wishes to employ a person for a longer time, EOR approach must be chosen.

EOR and contractor model

Contractor agreements assume the involvement of independent workers rather than employees. This model is also often used for temporary, project-based assignments. It is important to remember that there is a big misclassification risk between a contractor and an employee in the company which can lead to potential legal issues. An EOR ensures that employment is legally compliant with local labour law.

How does an Employer of Record work?

While it may sound complicated at first, a process behind the employer of record model is relatively straightforward.

The operating company selects a candidate

The client company recruits the employee they want to hire in another country

The EOR becomes the legal employer & local employment contract is issued

The Employer of Record uses its local legal entity to prepare and issue an employment contract that complies with labour law of the country where the employee is based. Depending on case-by- case situation, the work visa might need to be secured beforehand. Our company provides immigration services, more details can be found here.

Payroll and taxes are managed

The EOR takes on recurring responsibilities related to a payroll and ensures correct processing of income tax, social security contributions etc

Benefits are administered

Paid leave, sick leave, pension contributions and any other statutory benefits are being managed by the EOR.

Ongoing compliance and HR support

It is the responsibility of the EOR to monitor changes in local labour law and ensure ongoing compliance.

Example:

Imagine a UK-based tech company found a perfect candidate in Germany for a position of a software developer.

Instead of going through the administrative burden of opening a legal entity in Germany, the company chooses to work with an Employer of Record. The EOR hires the developer under a German employment contract and manages payroll and taxes. At the same time the UK company welcomes the new employee in the team and manages the daily work of a developer.

What services does an Employer of Record provide?

The Employer of Record does more than just providing an employment contract to the employee. Typically a wide range of HR and compliance services is included in the EOR offer. For example, read about the services included in our EOR package here.

Employment and HR administration

Locally compliant employment contracts and support with other documents requested by authorities
Employee onboarding
Employee record management. For example, control over PTO

Payroll and tax management

Regular payroll processing
Tax withholding and reporting of social security contributions with authorities
Payslip generation and creation of annual wage tax certificates

Benefits administration

Management of statutory benefits
Pension contributions (where required)
Support with benefits such as maternity leave allowance, sick leave allowance etc

Compliance and risk management

Insuring compliance with local labour law
Management of onboarding and offboarding processes
Representation in difficult legal and court cases

Additional services:

Some EOR providers ( such as ThisWorks EOR Services) provide additional services such as:

Work permit and dependent visa support
Background checks
Relocation support
Value added services: support with housing, company car, banking, etc ( depending on the country).

This vast list of services allows businesses to manage international teams, while staying compliant and avoiding complex local employment administration.

Benefits of using an EOR service

There are multiple advantages the businesses can get from working with an Employer of Record provider.

Faster global hiring

Setting up a new entity can take up to several months. With an EOR the hiring process can take several days.

Reduced compliance risk

A trustworthy EOR provider ensures the compliance with all local regulations. As the labour law varies greatly between countries, having a knowledgeable party to rely on can make a big difference.

Lower expansion costs

Establishment of a new entity is not only a time-consuming process, but also costly. With EOR services these costs can be avoided.

Access to global talent

The location of a remote candidate is not a problem if the company uses Employer of Record services. In other words, the best candidate for specific business purposes can be chosen.

Scalable hiring model

EOR services are ideal for organisations that want to scale international hiring quickly. They are particularly useful in the following situations:

Remote-first teams and organisations
Companies testing new markets abroad
Startups expanding internationally

How to choose the right Employer of Record

Choosing between several EOR providers is important, as it influences not only compliance, but also employee experience for new hires and how your company is perceived on the job market.

Here are some important things to keep in mind when deciding on your EOR partner:

Geographic coverage

Make sure that EOR provider can cover the country where you want to expand globally. Read about our EOR coverage here.

Pricing transparency

Check that EOR provider does not have any hidden costs and the pricing is clearly outlined in your MSA.

Compliance expertise

A strong EOR provider should have a team of experienced local HR specialists who understands all in and outs of a national labour law.

In-house vs partner model

Some EOR providers rely on their third-party partners, while others manage employment directly through their own local entities.

Customer support

It is important to find a EOR partner that helps with any questions or concerns in a quick and professional manner. That can be crucial when dealing with employee offboarding or any legal disputes.

Warning signs

Understanding the importance of choosing a right party, your company should be cautious of providers that lack local expertise and cannot give clear answers to your labour law questions. In addition, companies with slow response times can prove to be unreliable in critical situations. Furthermore, providers with complex pricing models with many hidden fees can create a lack of cost transparency and result in unforeseen expenses.

By selecting a provider with strong expertise in local labour law and reliable support from dedicated teams, your company can ensure a smooth international growth. Learn why companies choose ThisWorks as their EOR partner.

How much does an employer of record cost

The vast coverage of services the employer of record provides makes many businesses ask how much an EOR costs.

Pricing models vary greatly on the provider and the country of coverage, but most EORs use one or more of the following structures.

Flat monthly fee per employee.

The EOR provider charges a fixed monthly fee for each employee they have on the payroll from the client.

Percentage of salary

While not being a popular approach, some EOR providers charge a percentage of the employee’s salary, typically ranging between 5%-15%.

Setup fees

Some providers charge onboarding or offboarding fee for each employee.

The fee that the business needs to pay to an EOR provider also depend on the location of a service. Local labour law complexity of some countries can influence the fee. In addition, some countries have specific statutory benefits and payroll administration requirements. Furthermore, employee headcount in the specific location can influence the fee.

EOR vs setting up a legal entity

To establish a new entity the organisations needs to go through legal and tax registration. In addition, accounting support and ongoing compliance costs such as the fees for local labour lawyers can make setting up a legal entity significantly more expensive.

An EOR allows companies to expand globally without these upfront investments.

EOR vs hiring contractors

Some businesses decide to hire international workers as contractors. However, this approach can often lead to a misclassification risk, which can cause legal and tax liabilities.

A professional EOR provider ensures that the new starters are compliantly onboarded under local employment regulations.

EOR FAQs

Is an EOR the same as a PEO?

No. PEO model assumes co-employment and requires the business to already have established local entity, while EOR employs new talents through its own entity only.

Can an EOR hire contractors?

While some EOR providers can support hiring contractors, it is important to remember that main function of EOR is the employment of full-time workers legally in a country. A risk of misclassification between EOR and contractor should be also considered carefully.

Is an employer of record legal?

Yes, when established and structured properly, Employer of Record entities are legal and widely used for international expansion by many companies.

When should you use an EOR?

The most common reason for using EOR include:

Hiring employees located in another countries remotely
Testing new markets before establishing an entity
Expanding internationally

Can you switch from EOR to your own entity?

Yes. Many companies initially hire through an EOR for the ease and speed of expansion and later transition employees to own legal entities upon their establishment. It is important to remember that some countries require specific procedure to be followed in such a scenario.

Get in touch with ThisWorks

Expanding your team globally does not need to be long and administratively complex.

With the use of Employer of Record the businesses can have access to the best talent from around the world while ensuring full compliance with local labour laws.

ThisWorks can support your global expansion with our compliant Employer of Record services.

Contact our team to find our how we can help your international team glow fast and compliantly!

Beyond Compliance: How EORs Are Becoming Strategic Partners in Global M&A (Mergers and Acquisitions)

In today’s expanding world of business, Employer of Record (EOR) services have never been better understood as compliance facilitators. Formerly relegated to the check-the-box box for payroll and tax administration, EORs are now key partners in global mergers and acquisitions. That shift is reformulating how deals are being structured, accelerated, and absorbed. As companies try to simplify their cross-border deals, EORs are the silent booster to closing faster, adding value to the deals and increasing M&A efficiency.

The Compliance-to-Strategy Pivot

The role of Employer of Record (EOR) services has changed significantly in the age of global mergers and acquisitions (M&A). HRIS systems (Human Resource Information) used to be thought of as the building block of HR tools used to administer benefits and payroll. Their main goal was to minimize the risk of hiring employees in overseas markets simply to see firms comply with local employment legislation.

Yet, this classic model is being challenged. Today, EORs are becoming a strategic asset in M&A transactions that deliver value beyond compliance. The reality is that now, nearly all M&A deals are using EORs to do pre-closing test testing – something that was traditionally in the territory of your legal and finance teams.

Old Model: EORs as HR Utilities

Until now, the job of an EOR was quite straightforward – to make sure payroll was calculated and paid correctly, to file taxes and to ensure that employees were employed legally in your country of choice. Although these roles were critical to ensure compliance, they had little to directly impact the strategic choices of the deal. The emphasis was on mitigating legal and financial risk and not so much on being proactive and generating value.

The traditional EOR model served as a lifeline for many of these organizations, supplying the legal framework to allow businesses to employ personnel overseas without having to establish a local company. But this response was quite reactive, seeking to avoid the problem rather than to drive growth or to improve the deal-making journey proactively.

New Reality: EORs as Strategic Partners

There’s been a fundamental change in M&A dynamics in the past several years. Seventy-three per cent of deals now use EORs during the pre-close testing phase, according to McKinsey’s 2023 report. That’s because rather than using EORs to just assist with compliance, they are being leveraged to contribute real-time information about local labour rates, the calibre of workers, and the availability of recruiters. This change has helped make the upstream of EOR advancing from the role of collaborators to always being more of a strategic partner – where businesses can leverage better information to make more informed decisions or structure their deals more effectively.

The risk mitigation to value creation transition is fundamental to this stat. The age of the EOR has graduated from a process to ensure compliance to a decision-making aid in the acquisition stage. With EORs as part of the deal process, organizations will be able to discover potential talent gaps, assess cultural fit and ascertain what it will cost to integrate without surprises after the deal has closed.

Key Shift: From Risk Mitigation to Value Creation

The insights that an EOR service delivers during pre-close permit organizations to react immediately during the pre-closing period to ensure deal structures are optimal, talent retention models are maximized, and post-deal integration plans are in line with expectations. This intelligence helps businesses to mitigate against potential integration risks in advance, resulting in better post-deal integration.

For instance, EORs can help businesses evaluate the quality of the workforce and the costs associated with onboarding new employees. EORs can also assist companies in testing assumptions about local labour markets, enabling the business to ensure that the way a deal is being structured matches up with the actual cost of hiring (and keeping) talent. This change enables organizations to be more deliberate in their solution rationalization strategy and less focused on checking the compliance box.

EORs as M&A Accelerators

It’s not just about risk mitigation anymore when it comes to using Employer of Record (EOR) services in mergers and acquisitions (M&A). EORs are mission critical today as deal insights increasingly help to drive the deal making process. With pre-deal intelligence-gathering activities to post-merger integrations and more, EORs are fast becoming the backbone of faster, more efficient, and ultimately more successful M&A deals.

A. Pre-Deal Intelligence

Pre-deal intelligence is a central function of EORs in M&A. Before closing the deal, companies may use EORs to take a deep dive into the workforce of the target company. Usually in the form of 30-day workforce assessments run by locally recruited teams. They provide insight into the country’s labor costs, its talent pool and problems you may face in that market.

Using EORs, companies also have access to immediate analysis of the labour market in the area, something that allows truly educated decisions to be made. EORs enable acquirers to get a sense of employee satisfaction, skills shortages, and potential talent-related risks, helping them to assess the quality of the workforce prior to closing the sale.

Due Diligence Real-time labor cost analysis across 20+ jurisdictions has become the new normal in M&A, according to EY’s 2024 M&A playbook. This allows corporations to ensure their team is performing within industry averages, and modify deal terms accordingly.

B. Deal-Structuring Superpower

Among the most tactical of that influence they exert on M&As is in deal structuring. Adopting a “try before you buy” rationale, EORs enable acquirers to try a slice of the target company’s employees before completing the full transaction. This is especially true for talent retention plans, where an acquiring entity wants to ensure that a key employee will remain following the close.

For instance, Cisco employed an EOR solution to screen 50 Mexican engineers when preparing for an acquisition. It allowed Cisco to take stock of the engineers’ willingness to stay on after the acquisition and to negotiate the terms of the acquisition based on that retention data. This way, the talent strategy is robust, and the deal structure matches the workforce’s expectations.

C. Post-Merger Muscle

EORs are also important far beyond the close by facilitating the immediate implementation of the acquired teams. It’s not uncommon for the traditional ways of M&A to face serious timeline barriers while setting up in-country entities or restructuring payroll systems, etc. EORs bypass such vicissitudes by instantaneously onboarding workers into the system of the disciple.

Retention bonus structures can also be built into the EOR contracts to incentivize key personnel to remain with the business during the often critical post-merger period. This, in turn, can enable acquirers to work with greater speed, put in place successful employee retention measures, and do more promptly in building synergy across the workforce.

The New EOR Value Stack

As EORs play a larger role in international M&As, their contribution goes well beyond just compliance and HR. Fast forward to today, and EORs provide a thick value stack to speed along dealmaking, simplify integration, and save overhead. This EOR value stack is built from three distinct layers: Data, Speed, and Money.

Data Layer: Workforce Analytics Predicting Integration Costs

The use of EORs in M&A is most powerful in that it offers actionable data through workforce analytics. Leveraging data-driven insights, EORs assist acquirers in projecting integration costs, and evaluating potential risk and labour force dynamics.

These metrics are vital to provide a realistic estimate of both the actual and potential expense of integrating new teams and resources with the acquirer’s own operations.

Or for instance, EORs can offer real-time insight into employee satisfaction, cultural fit, and preparedness for post-merger change. This enables organizations to feel confident in their retention strategy and distribution of resources and costs in integration. The insights needed to make these predictions before the deal is done are priceless in minimizing integration costs and surprises.

Speed Layer: 72-Hour Employee Transfers Across Borders

Particularly appealing for EORs is so the speed at which they allow cross-border staff transfers. In the classic model, it could take months to move employees across borders, slowing the integration process and the pace of business. With EORs, however, this can all be done in as few as 72 hours, creating an opportunity to deploy the workforce in the new market as quickly as possible.

That speed is crucial for businesses that must get teams working together fast and keep day-to-day operations running smoothly following a deal’s closing. The 72-hour transition capability helps prevent inefficiencies in the hiring process, enabling acquirers to rapidly deploy top talent and ensure business continuity.

Money Layer: 18-24% Savings on Typical M&A Labor Costs

Another great potential of the EOR model is the cost savings that can be achievable. The cost savings using EORs could be as much as 18-24% of the standard M&A labour cost, per recent industry reports. This savings can be attributed to the cost of low overhead: companies can avoid setting up a new legal entity, dealing with local payroll, or navigating complicated compliance regs. Instead, these responsibilities are all handled by the EOR, freeing companies to put their resources toward building the business.

Here’s a quick breakdown of how the three layers of the EOR value stack work:

Layer	Benefit	Impact on M&A
Data	Workforce analytics predicting integration costs	Informed decisions on talent retention and cost management
Speed	72-hour employee transfers across borders	Fast integration and minimal disruption to operations
Money	18-24% savings on typical labor costs	Significant cost reduction and improved ROI in M&A transactions

Why This Matters

With the new EOR value stack, acquirers have a faster, cheaper, more informed way to complete M&A transactions. Through the use of EORs for workforce analytics, speed and cost efficiencies, (companies) can make a successful acquisition, streamlining the integration process and resulting in better overall deal results.

Warning: The Coming EOR Wars

With the rise of EORs in the world of mergers and acquisitions (M&A), the market is getting increasingly competitive. Now that EORs have emerged as a key participant in the deal-making process, the companies serving EORs are feeling more pressure to offer high-quality, efficient and scalable services. The result has been what several experts are calling the EOR wars — a showdown between boutique players and big platforms in an effort to corner the M&A market. Therefore set on a trusted EOR like us ThisWorks. Our experts are more than happy to consult you in your specific case.

Boutique Firms vs Platforms

Two primary types of EOR providers hold sway over the market today: boutique providers and platforms. Boutique firms, such we here at ThisWorks, focus on custom, high-touch services for companies in search of localized expertise in particular markets. We are popular among companies moving into more difficult, niche markets that require tailored service and a granular knowledge of local regulations.

And then you have larger platforms, such as Rippling, which take the opposite approach and not only use technology to manage across regions but also industries. The platforms offer wider distribution but can lack the local expertise of a boutique adviser.

The Red Flag: Lack of API-First M&A Dashboards

I think the main issue in the EOR wars is that API-first M&A dashboards don’t exist. A lot of the EOR players are carrying manual, legacy systems managing one of the most important things in an M&A event. This may lead to inefficiency, delays and mistakes in the transaction process. Companies seeking real-time insight and efficiency in M&A are also likely to be drawn to EOR providers with API-first solutions. Indeed, without this kind of personal service, EORs are going to struggle to compete and keep pace with the quickly changing landscape of faster, more efficient deal-making.

Why This Matters

The EOR wars are heating up, and companies need to strategically select their EOR provider based on considerations like tech integration, local knowledge and scale. Over the next several years, we will see which companies are best set to dominate the market and bring the most value to M&A deals.

The 2025 M&A Playbook

EORs, as the function grows and evolves, the where-to-next of global M&A will depend much on how businesses are employing this service type as a staple of their transactional arsenal. The 2025 M&A playbook appears to be an efficient, lean process for cross-border acquisitions that leverages EORs at every stage of the game.

Day 0: Deploy EOR Scouts in Target Market

A key component of the new M&A playbook is to have EOR scouts on the ground in the target market at Day 0. Such scouts are tasked with first looking at staff, labour expenses and potential talent shortfalls. With the help of EORs, aquirees can discover the quirks of the local workforce and have the hard data to make informed decisions from day one.

Day 30: Validate 80% of Workforce Assumptions

By Day 30, EORs confirm the accuracy of as many as 80% of workforce estimations. This is a key piece of the M&A puzzle that enables acquirers to validate critical information about employee retention, workforce calibre, and potential integration issues. Real-time data enables businesses to pivot their deal structure or talent retention strategies as needed.

Day 60: Structure Deal with Baked-In EOR Transition

On Day 60, the deal structure is ﬁnalized, including the EOR transition. It helps in streamlining the onboarding process- from payroll to employee integration. While EORs take care of local compliance and HR issues, the acquirer can focus on building their business without concerns over legal or operational obstacles.

Day 90: Close with Live Employee Retention Data

On Day 90, the deal is signed, and we have historical employee retention live data to gauge the integration’s success. Using this data, companies can more confidently make decisions on how to staff and which retention bonuses to offer post-merger.

Final Thoughts

EORs are not just a compliance tool anymore — they are turning into important strategic partners in cross-border M&A and more. EORs are changing the way companies have been doing cross-border acquisitions by bringing insights to pre-deal testing, speeding up their deal structures, and easing post-merger integration. With an accelerating need for speed, data-driven decisions and cost savings, EORs will continue to be pivotal in the M&A world, meaning they will play a significant part in the future of global deals.

FAQ

What role do EORs play in mergers and acquisitions (M&A)?
EORs have grown from compliance enablers to strategic allies, assisting organizations in understanding the intricacies of cross-border M&A transactions.
How do EORs assist with pre-closing activities in M&A?
EORs offer valuable information on local labor markets as well as the availability and qualification of talent, and cultural fit to facilitate more informed decision-making around M&A.
Why are EORs important in post-deal integrations?
EORs simplify hiring and retention processes minimizing downtime and helping employees get into the flow faster.
How do EORs contribute to deal structuring in M&A?
EORs provide pre-deal workforce assessments, enabling acquirers to self-sample the talent and modify deal terms accordingly.
What are the future trends in the EOR-M&A relationship?
EORs will remain critical to turn by enhancing more in-depth data analytics, accelerated processes and reduced operation costs.