Gerald Sauer, Sauer & Wagner (Photo: Courtesy photo)

A funny thing happened on the way to making the wealthy even wealthier: Workers' lives improved. It wasn't because corporate titans suddenly saw the light and decided to change their ways. It was strictly a pocketbook issue.

Businesses exist to make money. From child labor to exposing workers to harmful chemicals, nothing that helped the bottom line has ever been off the table. In the last century, lawmakers began changing the landscape—placing human lives and personal welfare over corporate profits—when public sentiment called for change.

In today's marketplace, economics are the tail that wags the dog of public benefit. Workers comp costs forced employers to make workplaces safer, coincidentally reducing fatality rates by about a third. Workers were gifted on-site gyms and anti-obesity programs when medical costs took too big a bite out of corporate profits. Employee absenteeism and its attendant costs steered companies toward on-site childcare and more generous telecommute policies.

#MeToo is the cause de jour. It's been good news for workers: more open communication channels, well-publicized anti-harassment policies, targeted training for managers and peers. Companies didn't come on board because it was politically correct but because harassment is expensive and time-consuming. Boards really don't want to deal with besmirched reputations and cratered stock prices.

#MeToo has also become the sine qua non of investment. When you're sinking good money into a company—whether a new startup or a well-established institution—you do your due diligence. With a team of lawyers and accountants, you perform a colonoscopy on the company's financials because you can't afford to make a mistake. Why wouldn't you perform the same level of scrutiny on every other aspect of that company, including the activities of its key management?

Acquirers have a right to know what they're getting, especially when it comes to sexual harassment. They want an insurance policy that puts the onus on the seller to come clean and make good if there's a Weinstein in the house.

Years ago, when I was a litigator in the entertainment industry, I observed the way deals were restructured to reflect the rapid pace of technological change in the industry. Well-known buyers had lost significant money by failing to include new developments, such as videos, in their due diligence. The new agreements were drafted in a way that expressly anticipated all possible future technologies. I learned that it's easier to take action on the front end than after the fact.

Now the prudent buyer's lawyer includes a morals clause in the merger agreement and maybe a clawback provision that helps the client get back money paid if later revelations damage the brand, or a holdback so the buyer doesn't have to sue to get money back. The last thing the buyer wants is to inherit a costly harassment claim; the first thing the seller wants is to get top dollar. Neither wants to pay the price of an unexpected surprise. The happy byproduct is that the company looking for investment or purchase will take proactive steps to make sure nothing happens.

This is no longer about what happens when the acquirer has heard rumors. I predict it will be standard procedure in all investment deals. Sexual-harassment diligence, like entertainment technology diligence years ago, will soon be a routine part of M&A due diligence. There's always risk when buying a company, and everyone's replaceable, but fewer skeletons in the closet make for a much better deal all around.

For the rank-and-file workers, it really doesn't matter what terms were in the due diligence disclosure. All that matters for them is that issues that can impact their daily workplace existence are being addressed, not swept under the rug. If laws are enacted to codify these protections, all the better.

It's a yin/yang that all boils down to the dollar. Current events impact economics, companies change practices to protect bottom lines, and laws ultimately are enacted that make it difficult for the companies to revert to past bad behaviors. Most importantly, light is shined on a problem that has been kept for too long in a dark place. It may all be purely reactive, but it effectuates change.

Let's all raise our glasses to corporate greed.

Gerald Sauer is a founding partner at Sauer & Wagner LLP of Los Angeles. He focuses his practice on intellectual property, employment and business law.