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Mergers & Acquisitions Checklist: Employment & Benefits Law Perspectives

This comprehensive checklist provides essential guidance for navigating employment and benefits law during mergers and acquisitions. It highlights critical areas to address, including defined benefit pension plans, retiree welfare benefits, multiemployer pension plans, golden parachute arrangements, and compliance issues. The expertise of William L. Scogland and David G. Gabor from The Wagner Law Group ensures that potential risks and liabilities are effectively managed, safeguarding both parties involved. Early involvement in the process can significantly enhance transaction value.

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Mergers & Acquisitions Checklist: Employment & Benefits Law Perspectives

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  1. Mergers & Acquisitions: A Checklist from the Employment & Benefits Law Perspective William L. Scogland, Esq. David G. Gabor, Esq. The Wagner Law Group

  2. William L. Scogland • Represents clients in: • Benefit and compensation issues in transactions • Qualified plan matters • Multiemployer plan matters • ERISA fiduciary issues • Plan investments

  3. David G. Gabor • Represents clients in: • Litigation • Negotiating and drafting contracts • Handling compliance issues • Creating corporate infrastructure • Drafting employee manuals, handbooks and policies • Training management and employees • Leading companies toward organizational excellence • Skilled negotiator, mediator and investigator

  4. Introduction • Discuss how to approach mergers and acquisitions • Overview of different potential issues to address. • Analysis of potential risk • Potential business issues that can arise

  5. 1. Defined Benefit Pension Plan • Determine whether the employees of the business being acquired participate in a defined benefit pension plan • If so, we need to know its funded status. Liability for underfunding could be a liability for the acquirer because of the controlled group rules • Actuaries can check assumptions for reasonableness

  6. 2. Retiree Medical • Determine whether the target business provides retiree welfare benefits (health, disability, life) • Determine whether the plan documents adequately reserve to the employer the right to amend or terminate the plan • Verify reasonableness of assumptions provided. • Determine whether the benefits are funded

  7. 3. Multiemployer Pension Plan • Confirm whether the employees in the business to be acquired participate in a Multiemployer pension plan • Distinguish this from a multiple employer plan (more than one employer and maintained pursuant to a collective bargaining agreement)

  8. Exploration of Multiemployer Plan • Evaluate potential withdrawal liability • Potential controlled group liability • Possible successor liability • Strategy on if and when to trigger withdrawal liability

  9. 4. Golden Parachutes • Determine whether the golden parachutes are opened by the acquisition • There is the risk that large payments to executives will be triggered by transaction and separation from service (single trigger or double trigger) • Negotiation strategy and potential liability to executives • Potential tax liability and planning strategies

  10. 5. Employee Stock Ownership Plan Confirm whether the target business sponsors an employee stock ownership plan (“ESOP”). The ESOP could be a significant stockholder. Review: • Pass through voting issues • Compliance issues • Employee relations issues

  11. 6. Employer-Employee • Ensure compatibility of employment policies • Review compensation practices • Compare benefit structures • Address the potential need for reorganization • Properly structure retention/stay packages • Review statutes, rules and regulations in all jurisdictions governing employer-employee issues

  12. 7. Legal Compliance and Audit • Tax qualification of plans • Immigration • Employee classification • Recordkeeping • Open investigations/litigation • Recent investigations/litigation • History of internal complaints

  13. 8. The “Flip Side” • Questions to ask of the acquiring company • Documentation that you require of acquiring company • Review how to respond to questions asked of your company • Steps to protect executives of target company

  14. The Checklist • Defined benefit pension plan • Retiree medical • Multiemployer pension plan • Golden parachute • Employer stock ownership plan • Employer-employee issues • Compliance and audit • The flipside

  15. Thank You We are available to discuss these and other issues that may arise when considering a possible merger and acquisition. Experience dictates that the earlier we are involved in the process the more value that can be added.

  16. Contact Information William L. Scogland wscogland@wagnerlawgroup.com David G. Gabor dgabor@wagnerlawgroup.com www.wagnerlawgroup.com • Boston Office • 99 Summer Street, 13th Floor • Boston, MA 02110 • Tel: (617) 357-5200 Fax: (617) 357-5250 • San Francisco Office • 315 Montgomery Street, Suite 902 • San Francisco, CA 94104 • Tel: (415) 625-0002 Fax: (415) 829-4385 • Illinois Office • 414 West Deerpath Road • Lake Forest, IL  60045 • Tel: (847) 250-1365 Fax: (847) 250-1367 • Florida Office • 7108 Fairway Drive, Suite 125 Palm Beach Gardens, FL 33418 • Tel: (561) 293-3590 Fax: (561) 293-3591

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