Employee Benefits in Mergers and Acquisitions, 2026-2027 Edition

1. Introduction

• Transactions and Benefits
• Transactions and Human Resources
• Approach
• Some Terms of Art and Conventions
• The Art and Confusion of Transactions
• Due Diligence: Making Sure That What You See Is What You Get
• Qualified Retirement Plans: Limiting Liability While Retaining Tax Benefits
• ESOPs: Transactions Involving Plans with Employer Stock
• Health and Welfare: Keeping These Plans as Healthy as the Employees
• Executive Compensation: Handling Management in Transition
• Employment Law and Labor Law: Transitioning Employees

2. Mergers and Acquisitions—An Overview

• Introduction
• Structure of the Acquisition
• Asset Acquisitions
• Stock Acquisitions
• Mergers
• Spin-offs, Consolidations, and Recapitalizations
• Corporate Law Considerations
• Securities Law Considerations
• Compliance with Hart-Scott-Rodino Antitrust Improvements Act of 1976
• Compliance with Worker Adjustment and Retraining Notification Act

3. Due Diligence

• Introduction
• Defining Due Diligence
• Scope of Benefits Due Diligence
• Representations, Warranties, and Indemnifications
• Reviewing the Benefit Programs
• Reporting Due Diligence Findings

4. Qualified Plans

• What Is a Qualified Plan?
• Purchasing a Company with a Qualified Plan
• Selling a Company with a Qualified Plan
• Correcting Qualification Failures
• Other Qualified Plan Issues
• SECURE Act and SECURE 2.0 Act Changes
• CARES Act Changes During the Coronavirus Pandemic

5. Retirement Plan Coverage Issues

• Coverage Requirements
• How a Corporate Transaction Affects Coverage
• Resolving a Coverage Problem During or at the End of the Transition Period
• Resolving Issues for Companies with Successive Acquisitions
• Qualified Separate Lines of Business
• Interaction Between Coverage Rules and Participation Rules
• Correcting Coverage Defects After Year-End

6. Defined Contribution Plans

• Introduction
• Pensions Versus Nonpensions
• General Defined Contribution Rules
• Defined Contribution Pension Plans
• Profit-Sharing Plans
• General-Tested and Cross-Tested or New Comparability Plans
• Contributions for the Portion of the Year Before the Acquisition
• 401(k) Plans
• Stock Bonus Plans
• Eligible Individual Account Plans
• Participant Direction of Investments and Fiduciary Liability

7. Defined Benefit Plans

• Introduction
• What Is a Defined Benefit Plan?
• ERISA Title IV and the PBGC
• Funding Considerations in an Acquisition
• Liability or Benefit on Assumption of Plan
• PBGC Reportable Events in an Acquisition
• Withdrawing from Participation in a Plan Covering Controlled Group Members
• Plan Terminations
• Unions and Multiemployer Plans
• Cash Balance Plans

8. Employee Stock Ownership Plans

• Introduction
• What Is an ESOP?
• Qualifying Employer Securities
• Comparison of ESOPs with Other Qualified Plans That Hold Employer Stock
• KSOPs
• How a Nonleveraged ESOP Works
• How Leveraged ESOPs Work
• Dividends
• Selling Stock to an ESOP: Corporate Refinancing
• S Corporation ESOPs
• Acquisition of an ESOP Company by an Independent Buyer
• What Happens to the Plan: Buyer's Options for the Plan in a Stock Acquisition
• ESOPs in Publicly Traded Companies
• Rollovers as Business Start-Ups

9. Health and Welfare Issues

• Introduction
• Types of Health and Welfare Plans
• Insured Versus Noninsured or Self-Funded Plans
• ERISA Coverage of Health and Welfare Plans
• Health Issues in Acquisitions
• Welfare Plan Issues in Acquisitions
• Continuation of Health Benefits Under COBRA
• COVID-19 Issues for Health and Welfare Plans in Acquisitions

10. Executive Compensation

• Introduction
• Stock Option Plans
• Nonstock Executive Compensation
• Taxation of Deferred Compensation Under Code Section 409A
• Golden Parachute Issues
• Million-Dollar Cap on Executive Compensation
• Stock-Based Compensation of Insiders in Expatriated Corporations
• Special Executive Compensation Considerations for Banks and Credit Unions
• Changes to Executive Compensation Under the Sarbanes-Oxley Act
• Changes to Executive Compensation Under the Dodd-Frank Act
• Employment Agreements
• Special Considerations in a COVID Environment

11. Employment Law

• Introduction
• Stock and Asset Acquisitions in the Employment Law Context
• Due Diligence with Respect to Employment Law
• Discrimination Issues
• Impact of Plant Closing Laws on Mergers and Acquisitions
• Successorship Issues Related to Union Matters
• Family and Medical Leave Act Issues
• Wage and Hour Issues
• ERISA Issues in Employee Communications
• Miscellaneous Issues

APPENDICES

• Appendix A: Benefit Plans Preliminary Acquisition Due Diligence: Checklist of Items to Review
• Appendix B: Acquisition Agreement: Sample Benefits Representations and Warranties
• Appendix C: Nondiscrimination Checklist and Flowchart
• Appendix D: Due Diligence Work Plan
• Appendix E: Detailed Due Diligence Work Program
• Appendix F: Sample Due Diligence Report
• Appendix G: Sample Agreement to Merge the Subsidiary Plan with and into the Parent Plan
• Appendix H: Health and Welfare Benefits: Checklist for Mergers and Acquisitions Issues and Sample IBNR Report
• Appendix I: Sample Termination Agreement
• Appendix J: Sample WARN Notice
• Appendix K: Summary of Plan Provisions—Defined Contribution Plans
• Appendix L: Compliance with the Fair Labor Standards Act As Amended
• Appendix M: Murder on the M&A Express: How Benefits Killed the Deal
• Appendix N: Sample Qualified Separate Lines of Business (QSLOB) Notice