It is important to keep your retirement plan in mind when either acquiring a new company or selling an existing company. The acquisition of a new company should raise a number of questions during the due diligence process. 

Questions such as the following should be addressed:

Does the company I am acquiring already have a plan and what will happen to that plan after the acquisition?

Will the new plan be merged into my existing plan and when and how will the acquired employees be allowed to participate in my
plan?

Other questions that will need to be addressed include determining if prior service with the predecessor employer will count for eligibility and vesting requirements.  Also, it is very important that all decisions made, including noting all participating employers, be documented.

If the decision is made to sell a company, a partial termination may occur. This can happen if an action by the employer causes a
significant decrease, generally at least 20%, in plan participation.

If your plan has a partial termination, all affected participants become fully vested in their account balances on the date of the partial plan termination, regardless of the plan’s vesting schedule.

The decision to acquire or sell a company is an important one with many things to consider, including the retirement plans that are involved.  It is important to consult with an advisor or ERISA counsel before any decisions are made.