The form of a corporate transaction sets the stage for the employee benefits and executive compensation (EBEC) strategy – in the scope of due diligence and purchase agreement negotiations and post-closing activity. The charts below provide a high-level analysis of some of the most critical EBEC issues that companies and their advisors should consider in corporate transactions.
For purposes of this chart, we discuss three different forms of a corporate transaction:
- A (complete) stock purchase transaction: For this purpose, we assume that the buyer purchases all of the stock of a holding or stand-alone company, such that no entities with employees or benefit arrangements remain behind with the seller.
- An asset purchase transaction: For this purpose, we assume that the buyer has the ability to “pick and choose” which assets and liabilities (including benefit plans and compensation arrangements) to purchase and which to leave behind.
- A “carve out” transaction: For this purpose, we assume that the buyer purchases all of the stock of an operating subsidiary, but that the benefit plans remain behind with the seller.
