The old saying that “a stich in time saves nine” is particularly applicable when Chase de Vere is trying to stitch together employee benefit solutions during corporate transactions and M&A deals.
Whilst we have great expertise in advising in these situations, we can’t always utilise this to its full potential since we are not always brought into the fold soon enough to make sure that we can use this expertise to their fullest.
Ideally, we would like to have at least a month’s notice of the work that needs doing in replicating benefits for transitioning employees. With sufficient notice, we would be able to ensure the most competitive terms, and pricing for the group and also ensure a seamless communication strategy to provide reassurance all round.
As employers tend to be particularly vulnerable to staff leaving during M&A activity, they can find that uncertainty over whether existing benefit levels can be continued can have an adverse impact on staff retention. Our thorough review, and communication strategy as outlined above would help to mitigate this and enable us to give clear reassurances that existing benefit levels will be maintained or even improved.
Need for market review
Without sufficient time to conduct a full market review, we may not be able to review the whole market to ensure the most competitive rates and policy terms.
Although we should be able to review and rebroke arrangements in the following year, the client may have to put up with not having the best premium rates or the most appropriate cover terms until then.
With pensions, for example, we are very restricted in our ability to negotiate the most competitive annual management charges if we can’t give providers the lengthy lead-in times they tend to require.
And, with group risk benefits, receiving adequate notice can enable us to get insurers to accept transitioning employees without too much medical underwriting. The leverage we can achieve by playing them off against terms offered by other insurers can play a key part in this.
Similarly, with private medical insurance (PMI), we have had cases where we have completed communications exercises for transitioning employees and have been approached confidentially to be informed that certain employees have serious pre-existing medical conditions.
Such individuals clearly need to know if they are still going to be covered and, if given adequate time, we may well be able to come to an agreement with the existing insurer to transfer them to a fresh plan at their new place of work.
A brand new medical insurance scheme, without these negotiations could exclude pre-existing conditions, leaving such individuals vulnerable.
From the moment that an M&A deal is announced, or possibly even suspected, life can be stressful enough for employees without them having to worry about whether they are going to experience a deterioration in their employee benefit levels. So, it’s in everyone’s interests to give them certainty.
Educational requirement
It is also important to realise that corporate transactions and M&A deals can require us to carry out a major educational piece with HR.
After all, employees are often moving from bigger to smaller companies, and smaller ones may not yet even have any employee benefits in the UK.
So, staff may not yet know exactly what they have to do to comply with pensions or other legislation, both at outset and in the future.
Combine this with the need to ensure that employers are able to provide the most appropriate and cost-effective benefits in a highly competitive and rapidly changing marketplace, and you will appreciate that a little more notice can go a very long way.
If you would like to find out more about what Chase de Vere can do to advise on the replication of employee benefits during a corporate transaction or M&A deal, then please don’t hesitate to contact us.
The above is for information only and does not constitute advice.
Content correct at time or writing.