Streamlining Benefits Plans During a Merger or Acquisition

When a company is going through a merger or acquisition, it’s crucial to ensure that benefits plans remain consistent and the process is streamlined as much as possible. Connie Cooper, who is an associate vice-president at CWB Wealth, emphasizes the importance of allocating the right resources to ensure a smooth transition and potentially even improving benefits coverage.

It’s essential to take the time to do things right, rather than rushing through the process. Cooper suggests that employers should revisit their goals for the merger or acquisition to align their compensation, benefits, and overall strategy as the process unfolds. These aspects can leave a lasting impression, so it’s crucial to keep them top of mind throughout the project.

In order to facilitate a smooth transition, it’s important to conduct a comparison of benefits plans line by line between the host company and the acquired entity. Assigning someone to ensure compliance with laws and regulations is also key, according to Cooper.

Uros Karadzic from EY Canada points out that each M&A deal is unique, but there are common challenges when it comes to benefits plans. Understanding the costs and risks associated with these plans is essential, especially in cases where there are large unfunded liabilities like pension plans or post-retirement benefits. This understanding may even lead to adjustments in the purchase price or a decision not to pursue the deal.

Benefits plans with actuarial liabilities can be particularly complex to assess during an M&A, as they can impact the balance sheet. Karadzic suggests that employers consider all available data when making decisions in these fast-moving deals, as having complete information is rare.

One challenge that arises in mergers where two companies are combining is the differences in benefits entitlements. Karadzic emphasizes the importance of managing costs without negatively affecting employees. Sometimes, the increased size of the new business can lead to cost savings as plans are merged and economies of scale are realized.

Employee feedback is crucial during an M&A process to ensure that benefits plans meet their needs. Cooper suggests using surveys and providing a channel for employees to ask questions. Since there are often many changes at the start of an M&A, having a forum for employees to seek clarification is essential.

Once the deal is complete and the new benefits plan is in place, clear communication is essential. Karadzic highlights the importance of communicating changes effectively and helping employees understand their new entitlements to make the best choices under the new plan. Cooper echoes this sentiment, emphasizing the need for a comprehensive communication plan that includes town halls, benefits meetings, newsletters, and online resources.

Overall, maintaining consistency in benefits plans and streamlining the process during a merger or acquisition is essential to ensure a smooth transition for employees. By allocating the right resources, conducting thorough comparisons, and communicating effectively, employers can help employees navigate the changes and make informed decisions about their benefits.