What's the difference between single-trigger and double-trigger acceleration?

Single-trigger acceleration vests equity immediately upon a change of control (the sale). Double-trigger requires two events: the sale AND the employee's termination without cause. Double-trigger is the market standard as it incentivizes employees to stay after the acquisition.

How do we handle accrued PTO for the acquired team?

Accrued, unused PTO is a liability that must be paid out upon termination in many states. During an acquisition, you typically either pay it out at closing or roll the accrued hours into your company's PTO system. This must be calculated and accounted for in the deal financials.

Do we have to offer COBRA to laid-off employees?

Yes. If you terminate employees from the acquired company and previously offered a group health plan, you are required by federal law to offer them continued coverage under COBRA. Typically, the laid-off employee pays the full premium, but offering to subsidize it for a few months is a common severance practice.

Can we keep the acquired team on their old, richer benefits plan?

You technically can, but you shouldn't. Running two separate benefits systems is an administrative nightmare and creates a two-tier culture of 'haves' and 'have-nots.' The goal is to create one unified team, which means one unified, equitable benefits package.

How long does a 401(k) plan termination take?

Properly terminating a 401(k) plan is a 60-90 day process. It involves a board resolution, formal notices to participants, distributing funds, and final filings with the IRS. You will need a Third-Party Administrator (TPA) to manage this correctly.

What's the difference between single-trigger and double-trigger acceleration?

Single-trigger acceleration vests equity immediately upon a change of control (the sale). Double-trigger requires two events: the sale AND the employee's termination without cause. Double-trigger is the market standard as it incentivizes employees to stay after the acquisition.

How do we handle accrued PTO for the acquired team?

Accrued, unused PTO is a liability that must be paid out upon termination in many states. During an acquisition, you typically either pay it out at closing or roll the accrued hours into your company's PTO system. This must be calculated and accounted for in the deal financials.

Do we have to offer COBRA to laid-off employees?

Yes. If you terminate employees from the acquired company and previously offered a group health plan, you are required by federal law to offer them continued coverage under COBRA. Typically, the laid-off employee pays the full premium, but offering to subsidize it for a few months is a common severance practice.

Can we keep the acquired team on their old, richer benefits plan?

You technically can, but you shouldn't. Running two separate benefits systems is an administrative nightmare and creates a two-tier culture of 'haves' and 'have-nots.' The goal is to create one unified team, which means one unified, equitable benefits package.

How long does a 401(k) plan termination take?

Properly terminating a 401(k) plan is a 60-90 day process. It involves a board resolution, formal notices to participants, distributing funds, and final filings with the IRS. You will need a Third-Party Administrator (TPA) to manage this correctly.

M&A Employee Benefits: A Founder's Guide to Integration

A tactical guide to M&A benefits integration. Learn to manage equity, healthcare, and 401(k) changes to retain the key talent you just acquired.

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M&A Employee Benefits: A Founder's Guide to Integration

You bought a team, not just a product. A fumbled benefits integration can make your best new people walk. Here’s how to handle it like a seasoned acquirer.

TL;DR: Winning M&A is about people, and your benefits strategy is the first signal to the new team. This guide covers the tactical process of integrating benefits—from due diligence to post-close communication—focusing on equity, healthcare, and 401(k)s. Get it wrong and you lose talent; get it right and you build trust and protect your deal's value.

Key takeaways

Begin benefits diligence the day the LOI is signed to uncover hidden liabilities.
Single-trigger equity acceleration is a major red flag; push for double-trigger as the standard.
For most tech acquisitions, plan to terminate the target's plans and merge all employees into yours.
Over-communicate every change. Silence breeds fear and encourages your best people to leave.
If the target's benefits were better, acknowledge it and use a one-time cash bonus to soften the blow.
Model the full cost of integration—severance, bonuses, admin fees—in your deal price.

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You Bought a Team, Not Just a Product

No acquisition fails because the spreadsheet math was wrong. Deals fail—and 70-90% of them do—because of people. A botched integration, a culture clash, or an exodus of key talent can quietly destroy the value of a deal you spent months closing.

Your employee benefits strategy is ground zero for this risk. The moment you close, every acquired employee is a flight risk. They're asking: "Am I safe? Is this a good move for my career? Do these new people value me?" Your benefits package is the first, most tangible answer you give them.

Get it wrong, and you confirm their worst fears. Your best new engineers and product managers will start taking recruiter calls. Get it right, and you build immediate trust, accelerate cultural integration, and protect the human capital you just paid for.

Phase 1: Due Diligence (The Hunt for Hidden Liabilities)

The day a Letter of Intent (LOI) is signed, the hunt begins. Your goal is not just to check a box, but to uncover every promise, plan, and potential liability that could blow up your financial model or retention strategy. Surprises here are always expensive.

Your Tactical Diligence Checklist

Your lawyers and benefits brokers will lead this, but you must drive it. Do not accept "we're waiting on it." You need to see everything.

Continue reading the full guide