401(k) Plans in Stock Purchase M&A Transactions: A Buyer's Guide to Choosing Termination or Merger

Summary

One of the most common questions we receive from buy-side clients in mergers and acquisitions (M&A) is how to handle the 401(k) plan of the target company in the context of a stock purchase acquisition: Should they require the target to terminate the 401(k) plan prior to closing? Or should they keep the 401(k) plan in place for a short period of time following closing and then merge it into their own existing 401(k) plan?