Due Diligence
The process of auditing a company's employee benefits programme with regard to potential risks/liabilities and the costs associated with providing such a programme.
Deal Transactions
Historically in the area of employee benefits, due diligence, investors and transaction advisors have focused mainly on a target company's pension scheme, usually defined benefit (final salary) and paid little attention to defined contribution pension schemes and very little or no attention to ancillary schemes or other employee benefit issues.
At Kudos, our proposition to Mergers & Acquisitions parties is to provide a full analysis of all employee benefit aspects.
Corporate Entities
This process applies equally to corporate entities who will usually have employed a financial adviser to implement their benefit programme, but will, in most cases, not have had this independently audited. The process is almost exactly the same as with Deal Transactions, but will focus more on the costs and perceived benefits involved in providing the programme.
Both of these services can be summarised in the following areas:-
» Potential Risk/Liabilities in respect of all pension schemes, whether defined benefit or defined contribution, together with all ancillary schemes such as Group Life, Group Income Protection, Private Medical etc, to ensure that all liabilities / risks are adequately covered
» Cost Analysis and Audit of existing benefit programme which will reveal whether savings may be made or the package may be run more efficiently in particular, the time/cost attributable to the HR function
» Integration where we would look at the potential integration of benefits, where practical, which can often lead to economies of scale, whether to the benefit of the employer or employee, and often serves to harmonise benefits following mergers/acquisitions
» Communication which we believe is a key area in employee benefits as, however significant an employer's benefit spend is, if it is not understood/appreciated by the majority of employees, it is uneconomic. We would review the communication process and make suggestions as to how this could be improved
» HR Function should be scrutinised as many companies will be using historical systems which may be outdated or archaic and can be costing the company unnecessary cost
» Market Analysis which will review how competitive a company's benefits package is compared to its peers as a competitive benefits package is acknowledged to be a significant tool in the recruitment and retention of quality staff which in itself can be a substantial cost to the employer
Kudos had been involved in over 200 transactions where we have provided our services to investors, lenders and transaction advisors. A specimen of some of the deals we have advised on are as follows:-
Click here for deals Kudos have been involved in
For a copy of our EBDD Check List, please click here
For more details contact Jim Tennent