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Keeping a line of business separate from ESOP after an acquisition

Client Description

A construction company with national reach

Problem

The construction company acquired a large specialty contractor, which presented the challenges of keeping the acquired company’s employees out of the ESOP in order to avoid ESOP ownership dilution.

BerryDunn’s Solution

BerryDunn experts worked with our client to help management:

  • Maintain the acquired company’s separate 401(k) retirement plan outside of the ESOP
  • Establish and monitor Qualified Separate Lines of Business (QSLOB) status

Outcomes

With the help of our employee benefits consultants, management was able to establish the new subsidiary as a QSLOB so that the new employees did not enter the ESOP and dilute existing participants’ ownership shares. The consultants then helped management develop a process to monitor and protect the subsidiary's QSLOB status.

*Identifying information was changed to conceal our client's identity.

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