Merger & Acquisition Retirement Plan Support

A successful merger or acquisition starts with a comprehensive strategy

Mergers and acquisitions (M&As) are fast-paced, complex transactions requiring a thorough review and attention to detail through numerous stages. This can be a challenge for many organizations when also remaining focused on the day-to-day business goals.

As the acquisition process moves along, an in-depth review of a company’s retirement plan can often be overlooked. A company that understands the M&A process and has a benefits integration strategy is more likely to be successful in merging with or acquiring a new company.

USI Consulting Group’s (USICG) experienced team of ERISA attorneys, actuaries and consultants will work with you to complete a thorough due diligence to identify risks and liabilities, compliance issues and any other hidden retirement plan related issues – helping your organization mitigate risk and incremental costs. Our comprehensive M&A support will guide your organization through all phases of the transaction, including;


Strategy design	Pre-acquisition due diligence	Negotiation & structuring	Integration	Employee communications

Understand the complete picture

Having a clear understanding of the business will help to build the strategy for how the employee benefits will be integrated moving forward. As the buying organization, you will want to know:

All aspects of the organization’s industry, including lines of business, geography and management
Management’s objectives
Workforce profiles
Whether the M&A transaction will be one of best practice or a clear buyer/seller transaction

Uncover hidden liabilities

In addition to knowing the goals of the business in preparation to move forward, it is important to determine how the transaction is going to be structured. Whether the buyer will acquire the assets or stock of the target company will affect virtually every aspect of the deal. USICG can offer retirement plan due diligence support for both types of transactions.

Asset Acquisition	Stock Acquisition
Occurs when a PORTION of the Seller’s assets are purchased (including for example, a location, one or more buildings or plans; goods or inventory, a division) Employees are often hired by a newly established company or have employment status transferred to an acquiring entity	Occurs when the Buyer acquires ALL OR MOST of the stock in the Seller by exchanging cash (or other consideration) for stock in and or the Seller Employees often continue working for the acquired entity with minimal disruption to employment status
Seller generally retains legal responsibility and liabilities of the Seller’s retirement plan(s)*	Buyer generally assumes legal responsibility and liabilities of the Seller’s retirement plan(s)*

Benefits of thorough due diligence of a retirement plan prior to an acquisition:

Mitigates the risk of potential corrective contributions or IRS tax penalties post-acquisition

Saves the buyer from potential future compliance issues

Consider four retirement plan options

There are four options to consider when determining the outcome for all the existing qualified and/or nonqualified plans. Reviewing these options closely early on is crucial for the buyer, as a decision for the fate of the plans must be decided prior to closing the transaction. Your USICG team is equipped to walk you through each option and reach decisions based on your organization’s desired outcome.

Merge

Buyer interested in having one unified plan with consistent benefits among all employees

Terminate

Buyer not interested in assuming liability for seller's plan and/or maintaining any protected benefits of
seller's plan

Spinoff

Buyer only acquiring a portion of the seller's company

Separate

Buyer interested in maintaining separate plans and keeping the current benefit structures of buyer's and seller's
plan separate

Set a game plan to move ahead

After a complete review and comparison of the seller’s and buyer’s plans, your USICG team will provide a report that presents findings, recommendations and options for the merged plan, giving your organization guidance as you move forward in the process.

Following the completion of the transaction, USICG also helps ensure implementation of the plan that was set as part of the pre-acquisition due diligence. This often includes:

Recordkeeper negotiation

Transition relief period guidance

Plan merger assistance

Plan corrections

Nondiscrimination testing projections

Establishment of a new plan

USICG's support during M&A transactions can be key to helping organizations mitigate risk and incremental costs

Case Study: Due diligence support through acquisition

A medical technology company in the Midwest was seeking a service provider with the expertise needed to guide it through a pending acquisition. The company had limited Human Resources and Finance support and would need to rely heavily on the selected vendor to help them execute each step in the process. Based on its exceptional track record in the M&A marketplace, USICG was selected to help the company successfully execute its vision.

Due diligence services provided by USICG consultants included:

Coordinating the launch of new 401(k) and nonqualified deferred compensation (NQDC) plans at an accelerated pace to meet an aggressive go-live date

Conducting a recordkeeper Request for Proposal (RFP) and determining the best customized fit for the client

Creating a low-cost investment menu spanning all major asset classes while simplifying retirement plan participant decision-making

Writing a new 401(k) document with adaptable language to achieve the goals of the client

Providing plan design benchmarking information to ensure the client’s retirement plan would be competitive in the industry

How USI Consulting Group can help

USICG’s experienced M&A experts are available to guide your organization through the complete retirement plan due diligence process, helping you mitigate risk and incremental costs. Through our parent company, USI Insurance Services, we have employee benefits and property & casualty experts to help with your holistic benefits offering.

To learn how we can help your organization, please contact your USICG representative or reach out to us at information@usicg.com.

* This is what generally occurs, but the disposition of the Plan can be negotiated pre-close.

Investment advice provided to the Plan by USI Advisors, Inc. Under certain arrangements, securities offered to the Plan through USI Securities, Inc. Member FINRA/SIPC. Both USI Advisors, Inc. and USI Securities, Inc. are affiliates of USI Consulting Group.