M&A and nonqualified deferred compensation plans due diligence considerations

With merger and acquisition (M&A) momentum showing no signs of slowing down, companies should review their current nonqualified deferred compensation plans (NDCPs) to assess whether such plans can withstand the rigors of an M&A due diligence test, particularly with respect to compliance with Internal Revenue Code Section 409A. For companies in the midst of an M&A process, a careful examination and comparison of each of the respective companies’ NDCPs is recommended prior to closing the deal so that each side knows exactly what they will be getting into (as well as what they will be getting out of the NDCPs) when the change in control occurs. This article by Milliman’s Dominick Pizzano and White & Case’s Henrik Patel provides more perspective.

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