Merger and acquisition activity has started to increase with recent reports indicating that deals peaked in March 2021 further to the initial impact of Covid 19 in 2020*.
The deal process inevitably involves teams of lawyers and accountants reviewing contracts, stating liabilities, and delving into due diligence across a range of services.
There’s benefit though in other experts being involved earlier on, helping ensure the deal struck is as profitable as possible, while also reducing liabilities. And those are employee benefits specialists.
Employee benefits in the room
Let’s pause here and consider why it might be an advantage to have a Mergers & Acquisitions (M&A) employee benefit specialist involved from the outset.
Typically, we come into play when the deal is almost complete, principally to implement the new organisation’s benefit structure. Often, the benefit structure will have been agreed in principle following on from staff consultations, but without full comprehension of whether it can be implemented.
At that point there is no wriggle room.
It is often too late to avoid expensive liabilities that can potentially have an impact on the earnings from the deal now and in the future.
Usually, the benefits on offer for staff moving to the new employer are not always considered critical to the deal.
One opinion is that the employment lawyer has this covered: advising on contracts, TUPE, benefits — including generous redundancy entitlements — and even pension schemes.
© Supplied by Acumen Employee BeneHowever, some employee benefits issues can have an impact on the value of the business whereas others have the potential to create liabilities that could stop trading. Others might even disenfranchise employees who are key to the new venture.
Then there are the physical practicalities, economies of scale often mean that large employers have access to benefits smaller employers simply do not.
The timing of an employee benefits consultation is crucial. Finding out a few days before the deal concludes does not make it possible to review and deliver what is promised to all stakeholders and can add to an already stressful experience, adding additional pressure to find alternatives at the last minute. The risks can come in various guises, with various implications to the transaction and can have a negative impact on the bottom line.
Effective planning from a benefits perspective involves acquiring all the relevant information at the onset to ensure decision-makers have a clear view of the status of all benefits such as those currently offered across different employee teams to the level of cover included on these benefits.
This means it is crucial to bring in the right expert at the right time.
Over the years we have collaborated with buyers and sellers and have added real value to the process and identified potential problems before they become reality – often saving hundreds of thousands of pounds in liabilities. While there can be many challenges with a merger or acquisition, this can provide an ideal opportunity to review and enhance employee benefits across all teams at a time when consistency and communication is key.
Anne Lawson is an employee benefits consultant at Acumen Employee Benefits.
anne.lawson@acumeneb.com
01224 001946
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