M&A Due Diligence

When two companies merge or a business is acquired through a stock or asset purchase, attention must be paid to the benefit plans of the company being acquired. Particularly in a merger or a stock acquisition, the acquiring company can become responsible for the benefit plans of the acquired company and any associated liabilities. Assessing the extent of any potential liability is critical so that those liabilities are reflected in the price paid or so amounts can be escrowed to protect the buyer from the costs of any potential liabilities.

SBA tailors due diligence analysis to the specifics of the company being acquired. We provide comprehensive due diligence around the benefits plans identified that includes such tasks as:

  • Gathering and cataloging of all required plan documentation, including plan documents, plan amendments, summary plan descriptions, summary of material modifications, etc.
  • Review of the plan document and associated documentation to ensure compliance with all regulatory requirements and for any concerning provisions
  • Review of participant communications, including fee disclosures, and the participant website
  • Review of 5500 filings
  • Identification of all plan vendors
  • Review of how plan fees are paid and appropriateness of those fees
  • Review of non-discrimination testing
  • Analysis of plan provisions to determine if plans can be merged into existing plans of the acquiring company
  • Review of history of plan issues and VCP filings
  • Review of corporate governance, including investment policy statement, history of committee meetings, investment review meeting and process, and review of plan expenses
  • Identification of issues with any of the underlying investments
  • Analysis of recordkeeper compliance with plan provisions (e.g., match, loans, etc.), if necessary
  • Identification and review of any ancillary plans (e.g., Non-qualified plans)

We summarize our findings thoroughly and concisely in a written report, identifying actions which should be taken by the acquiring company. Our analysis includes recommendations for how to fold the acquired company’s plans into the existing plan of the acquiring company.

This service is available for the following benefit plan types:

Health &