Q: What do we do about benefit plans in a merger or acquisition?
A: Those employees who are retained will be anxious to learn how their benefits will be affected by the M&A. The necessary and complex decisions about health and welfare and retirement plans must be made by aligning the benefits mix with the M&A goals. Some plans may be terminated, others rolled over or people may transition from the seller’s plans to the buyer’s plans. Many plans are governed by ERISA and IRS rules. In conducting a benefits analysis and making the decision on how to structure benefits, the buyer will also take into consideration their total compensation philosophy and other employee relations factors. It is often helpful to develop a template to compare buyer and seller benefits, listing all plans, their funding levels and the cost to the organization. Other issues such as vesting, hire dates, service dates, leave and sick balances, will also need to be addressed.