When evaluating merger and acquisition (M&A) opportunities, the biggest business risk often results from the questions you don’t ask. Due diligence efforts surrounding your employee benefits program often take a back seat to more intensive discussions addressing financial terms, purchase agreements and closing details.
Bukaty’s M&A talent knows the benefit-related and human resource questions to ask and will prepare an analysis of the health and welfare plans that we help you manage. Our review addresses plan risks, funding strategies, benefits and policy comparisons, and compliance requirements.
Whether you’re considering an asset or stock purchase, it’s important to understand all potential plan liabilities. Self-funded plans pose greater risks because large-claimant costs can become the immediate financial responsibility of the acquiring company, unless structured otherwise. It’s important to identify COBRA participants and to evaluate the maximum number of months remaining before COBRA rights expire. In any M&A evaluation, it’s important to analyze current and future risk by reviewing the following
When two organizations consider joining forces, it’s important to determine how benefit plan premium costs are allocated between employees and the employers. Funding strategies have an impact on overall costs for the acquiring employer and can create inequities within the employee population when one plan’s contributions are more generous than the others.
Your Bukaty team will provide a side-by-side comparison of employee/employer costs for the coverage tiers of both organizations and project cost implications. Employers subject to the employer mandate within the Affordable Care Act (ACA) are responsible for providing minimum essential coverage (MEC) that meets one of three affordability safe harbors. The threat of ACA penalties should be analyzed as well as the cost of avoiding penalties.
Traditional health and welfare plans, such as medical, dental, life and disability products, are highly valued by employees and often a factor in any job offer evaluation. However, it’s equally important to consider organizational differences in coveted benefits such as vacation, sick and holiday leave. If there is an imbalance in these paid-leave programs or other company perks, it’s important to have a game plan to address.
Company policies reflect company culture. As part of our benefit and policy comparison, we review employee handbooks and highlight where simple policy differences exist between two organizations. The success of any merger or acquisition is dependent upon employee performance. Organizational leaders responsible for merging cultures need to understand if policy differences threaten employee alignment.
Application of many federal laws is based on the size of the employee population. An acquiring employer needs to understand the implication of these various laws should the employee populations merge. We can also identify where state laws affect employer-provided paid leave programs. Our M&A review will identify how the newly combined workforce is impacted by various federal laws and regulations.
A thorough review of your benefit plan components will help identify potential liabilities and challenges in any merger and acquisition considerations. Our team respects the confidentiality of all proposed transactions and takes the necessary precautions to ensure materials and emails are encrypted and securely stored. When M&A activity is part of your future growth plans, Bukaty Companies is here to lend a helping hand. Contact your benefits consultant to get started.