Handling the Impact on Benefit Plans of Corporate Acquisitions

Here is a fine overview of employee benefit issues that arise after a corporate transaction. Of interest to me in particular is the discussion of compliance problems - broadly defined - in maintaining or running off the seller’s benefit plans and in amending the buyer’s plan to deal with the acquired employees or the coordination of the benefit plans. I preach regularly on this blog and in seminars, webinars and the like about the sheer importance, from a litigation perspective, in focusing like a laser on compliance issues. Compliance issues can often lead down the road to litigation, and thus strong compliance is the best way to avoid litigation. Beyond that, though, a focus on compliance at the operational level is indicative of a well run plan, and a well run plan is less likely to make the types of errors - whether of compliance or otherwise - that result not just in litigation, but also in liability. Although other issues may be in the foreground of a corporate transaction, the centrality of compliance in these ways makes it important that the details of the benefit plans not get short shrift during or after the transaction. Indeed, in some ways it’s a penny wise, pound foolish issue; I know from my own practice a company can spend years in litigation and many thousands of dollars sorting out problems with benefit plans after a transaction, and avoiding that outcome through a little extra planning and foresight is always a worthwhile investment.