Mergers & Acquisitions

Outland Consultants help companies assess and manage employee benefit costs and risks associated with an acquisition, through Due Diligence analyses, Transition and Integration support, and Benefit Harmonization

Due Diligence Analysis

Pre-deal review of the target company’s employee benefits; identification of costs and risks
We provide research and analysis regarding:

  • Statutory and mandatory employee benefits, including benefits financed through the social system
    and those that must be financed directly by the employer
  • Supplemental employee benefit programs and promises, including individual executive promises and
    change of ownership liabilities
  • Unfunded pension liabilities and periodic costs on a post‐closing basis, with explanation of whether
    these benefits are mandated or voluntary, and comments about the financial risk
  • Concerns and effects for spin‐off of a small group

 

An optional type of DD study would provide the estimated costs for the statutory and supplemental benefit plans by country on a stand-alone basis. This is valuable for asset purchase / spin-off situations where benefit costs are presented only on a combined group basis.

Transition and Integration of International HR/Benefits

Support for asset purchase / business spin-off

 

Employee Benefits

  • Obtain details of existing benefits package and employee census including family members; current and detailed information is often missing from the data room
  • Confirm that current employee benefit programs can be replicated, or advise any limitations and suggest trade-off and alternatives to offer employees; e.g. replace a DB pension with a hybrid / targeted defined contribution scheme with similar value; such changes would be included in the employee consultation or works counsel notification process noted above
  • Design and market replacement benefits package, including use of global insurance where appropriate
  • Review insurance contracts and obtain the company’s authorized signature
  • Draft benefit descriptions for the purchaser to communicate to transferring employees
  • Recommend benefit provider by country
  • Implement benefit package; arrange local meeting of benefit broker and employees to explain benefit package and take enrollments
  • Design replacement pension plan and pension expense calculation
  • Manage transfer of pension asset; request to the seller for transfer of full vested value to minimize future cost to company

 

Harmonization of Employee Benefits

 

Post-closing integration of acquired company benefit plans into purchaser’s existing plans

 

Steps to Harmonization

  • Research and document benefit programs of the existing entity
  • Based on results of research, recommend a single benefit structure per country, including grandfathered benefits as appropriate to avoid reduction in benefits for any current employee
  • Recommend a single broker of record per country. This would likely be one of the current brokers, but may alternatively be an outside broker
  • The logical time for introducing the Harmonized Benefit program is at renewal of insurance contracts for the largest entity in each country. Starting before the renewal, market the benefit plans through the named broker of record, and recommend the carrier with the best package
  • Note: for countries where the combined employee count does not reach the minimum level for a group contract, it would be advisable to retain any existing individual policies, thus avoiding repeated underwriting requirements
  • Another concern is exclusion of pre-existing conditions that is probable with small groups. Where this is an issue, advise how best to accomplish harmonization while retaining current contracts
  • When an insurance carrier has been selected to implement the harmonized benefits plans per country, draft a summary of benefits for the company to distribute

 
For more information email us at: info@outlandconsultants.com