Changing health benefits after an acquisition...

March 04, 2022

by a searcher from Brigham Young University in Kahului, HI, USA

We are working through due diligence on a company that has had reduced revenue over the past 3-6 years but stable the last 2. Because of this, or bad decision making, they probably have too many employees and definitely have too rich "health benefits." We are working to try to keep all employees but feel like its a give or take between them and the benefits.

Have you dealt with a change of health benefits (reduction!) post acquisition? How did it go? How did you handle it? It's our largest lingering red flag....

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Reply by a professional
from Seton Hall University in Morristown, NJ 07960, USA

A lot of follow-up questions to your post.Health benefit costs, acquisition or not, are an ongoing battle.What's the headcount size?Large group benefits are generally cheaper than small group.Definition might be different state by state, but NY/NJ seems to center around 50 people.Here on Searchfunder we don't usually talk about 50-person groups, but for benefit purposes you can get that rate through a Professional Employer Organization (PEO) (with as little as 5 headcount).The better benefits, the lower cost.But you have to navigate through it.Having attacked this problem before, I have some people I trust to cover me and my groups.I am happy to make an introduction if you let me know location, industry and headcount.And your direct email.

Reply by a professional
from Northwestern University in Kansas City, KS, USA

Thanks ^redacted‌.I agree with ^redacted‌ in that a PEO is a great option when an employee base is less than 50 employees.It can continue to be a good choice (depending on circumstances) even as you grow a bit past 50 employees.50 employees is sort of the magic number to gain more optionality (more levers, more specificity, more control, etc.) with respect to health care benefits.My partner ^redacted‌ would be a good person to chime in as well.

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