ERISA Benefits Law Desk ReferenceERISA Benefits Tech, LLC

Part 25 · Chapter 2

Purchase Agreement Benefits Provisions

Law stated as of October 3, 2026 · Employee Benefits in Mergers and Acquisitions

Scope and status

A working guide to reviewing and negotiating the benefits provisions of a stock purchase, asset purchase, or merger agreement. Read it with Benefits Due Diligence Request List and Issue Checklist (what diligence turns up) and Employee Benefits in Mergers and Acquisitions (the substantive overlay). This chapter identifies what each provision must accomplish and where it commonly fails; it does not supply drafting language.

How to use: work the provisions in the order below — they build on each other, and a defect in the definitions section propagates through everything after it. Each unit gives the provision's function, the buyer and seller positions, and the recurring failure. The substance of each benefits question is in the Part that covers it.

Sections

Part A is shown in full. The other sections are listed by title; their text is available to subscribers.

Part A — Definitions

A1."Benefit Plan" / "Employee Benefit Plan"

Part 25, ch. 2, § A1

Function. Defines the universe the representation covers. Recurring failure: a definition limited to ERISA plans, which omits everything that generates the largest surprises — nonqualified deferred compensation, equity and phantom equity, bonus and commission programs, severance arrangements that are not ERISA plans under Fort Halifax, individual employment and retention agreements, fringe benefit programs, and foreign plans. Buyer position: define broadly and expressly without regard to whether the arrangement is written, funded, or subject to ERISA, and expressly include arrangements maintained for individual employees, former employees, directors, and contractors. Seller position: resist the "or any other arrangement" catch-all only if it is genuinely unbounded; otherwise negotiate the disclosure burden through materiality rather than by narrowing the definition — a narrow definition is a false economy that produces indemnity fights later.

A2."ERISA Affiliate"

Part 25, ch. 2, § A2

Function. Extends the representation to Code §414(b), (c), (m), and (o) group members, which is essential because controlled-group liability for Title IV and certain excise taxes is joint and several and does not respect the deal perimeter. Recurring failure: an ERISA Affiliate definition keyed only to §414(b) (parent-subsidiary), missing §414(c) common control over non-corporate entities and §414(m) affiliated service groups — the structures most likely to be present at professional-services and private-equity-owned targets. Note: run the actual analysis; do not rely on the definition to do it. → Part 1 (Controlled Groups and Affiliated Service Groups).

A3."Continuing Employee" / "Transferred Employee"

Part 25, ch. 2, § A3

Function. Identifies the population the employee-matters covenant applies to, and the moment of transfer. Recurring failure: ambiguity about employees on leave at closing (disability, FMLA, USERRA, workers' compensation) — who are frequently omitted from the census, and whose reemployment and coverage rights do not pause for the transaction. Address them expressly. USERRA rights in particular run against the successor employer regardless of what the agreement says. → Part 16 (FMLA, USERRA, and Wellness Programs).

A4."Closing" versus the benefits transition date

Part 25, ch. 2, § A4

Function. Benefits transitions rarely happen at the closing instant; payroll and benefit administration typically move at a month or pay-period boundary. Recurring failure: an agreement that says benefits transfer "at Closing" while the parties operate a transition services arrangement for weeks afterward, leaving coverage, contributions, and fiduciary responsibility undocumented in the interim. Define the transition date separately and say who is the plan sponsor, the administrator, and the payer during the gap.

Part B — Representations and Warranties

  1. B1The core benefits representationSubscribers
  2. B2Qualification and correction representationsSubscribers
  3. B3Title IV representationsSubscribers
  4. B4§280G and §409A representationsSubscribers

Part C — Covenants (the Employee Matters Article)

  1. C1Compensation and benefits continuationSubscribers
  2. C2Service creditingSubscribers
  3. C3Welfare plan transitionSubscribers
  4. C4The 401(k) covenantSubscribers
  5. C5Severance and workforce covenantsSubscribers
  6. C6Equity award treatmentSubscribers

Part D — Allocation Provisions That Are Frequently Omitted

  1. D1COBRA responsibilitySubscribers
  2. D2ACA reporting for the transaction yearSubscribers
  3. D3Successor payroll and employment taxesSubscribers
  4. D4Run-out claims and stop-lossSubscribers
  5. D5Correction responsibilitySubscribers

Part E — Conditions, Indemnity, and Survival

  1. E1Closing conditionsSubscribers
  2. E2Indemnity scope and survivalSubscribers
  3. E3Escrow and purchase price adjustmentSubscribers

The first Part of each chapter is open to everyone. The remaining sections, with their authority and practice points, are available to subscribers and to clients of ERISA Benefits Law Group, PLLC whose engagement includes access.

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