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General Considerations


Guest Robin Flaherty

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Guest Robin Flaherty

I would like to open up a discussion about employee benefit considerations when a merger or acquisition occurs. More specifically, what are the implications associated with the merging of two benefit plan(s) into one or the acquiring company company and their benefit plan(s) vs. the acquired company benefit plan(s)? Does anyone out there have experience with either type of business transaction related to this topic?

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It depends. What type of plan - 401(k) or other? What type of transaction - asset sale or stock sale? Generally, if it is a stock purchase the buyer becomes responsible as successor employer for the existing plan(s). If it is an asset sale the seller maintains responsibility for the plan, but other options exist such as a merger or plan termination. Is the seller part of a controlled group of companies that will continue to exist? Will employees go to work for another company in the controlled group or stay with the buyer? Will employees continue to work for the buyer in the same capacity as they have been working for the seller? Are ther any DB plans - if so what is the funding status? Will the buyer want to give prior service credit for employees of seller? These are just a few of the areas to think about in this fun area!

DMH

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Robin:

There is a procedure call "Due Diligence" that Buyers/sellers got through preceding a sale/purchase of a business that would analysis, among other things, benefit plan issues. try the following web site for an education on types of information analysised. http://infoseek.go.com/?win=_search&sv=M6&...ing/Selling+A+B usiness,+Due+Diligence,+Valuation, +Negotiation+And+Franchising+...&top=

[This message has been edited by Dave Baker (edited 12-09-1999).]

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