Employee benefits due diligence during a transaction can protect buyers from unpleasant surprises post-closing and give sellers a negotiating edge by ensuring that their benefits plans have a clean bill of health. It provides confidence to both sides that the benefits part of the deal is taken care of.
Whether we’re advising the buyer’s or seller’s team, our proven, efficient process is the same:
Review the employer’s benefits.
- Which ones are ERISA plans and which aren’t? Are benefits offered that frequently require correction?
Coordinate with the employer’s in-house benefits personnel, fiduciaries, insurance brokers and third-party administrators.
- How much professional help has the employer had in administering its benefits? Have the benefits been administered in compliance with the law?
Review the purchase agreement for ERISA and other benefits-related provisions.
- What is the seller being asked to promise about their benefits plans? Are the promises appropriate to the benefits?
Negotiate benefits-related deal terms.
- Is a blanket indemnification against all damages appropriate? What about holdbacks for plan correction costs?
Coordinate merger, transfer or termination of benefit plans.
- Is the buyer assuming any of the plans? Will seller’s employees be provided benefits through buyer’s plans? If so, when?
Each of these steps is scaled up or down to fit the size and structure of the transaction. We will work with you to determine an employee benefits due diligence budget and timeline that fit your or your client’s needs.