Global Benefits During M&A: Turning Challenges into Opportunities

Global Benefits During M&A: Turning Challenges into Opportunities
August 27, 2025 8 mins

Global Benefits During M&A: Turning Challenges into Opportunities

Turning M&A Benefits Challenges into Opportunities

How pay and benefits are managed in M&A transactions creates a lasting impression on employees. Mismanagement can lead to disengagement and attrition, eroding deal value. But the challenge of integrating employee benefits can also bring opportunities to improve business outcomes.

Key Takeaways
  1. Clear employee benefit principles are essential for fair treatment and M&A deal success.
  2. Whether an organization is expanding or consolidating, employers can take advantage of economies of scale to mitigate potential cost increases.
  3. With the right advisor, an M&A transaction can be an ideal lever to reshape employee benefits for strategic advantage.

 

Employees are at the heart of every successful organization. However, when it comes to mergers and acquisitions (M&A), pensions and benefits are often not an immediate priority despite being among the most complex — and impactful — elements to manage. The stakes are especially high when dealing with the intricacies of a corporate carve-out.

The people aspect of M&A is hard to get right. People issues are complicated and related challenges cannot always be solved by a simple formula or templated solution. Corporate transactions bring complex challenges — from requiring the redesign of employee benefits to executing complex pension liability transfers. However, by following best practices, employers can go beyond troubleshooting potential issues and create opportunities for strategic advantages.

When employee benefits and pensions are thoughtfully addressed during a corporate M&A transaction, it’s more than a risk-mitigation exercise — it’s an opportunity for long-term growth. Here are recommended approaches to overcome common challenges that exist today:

Scenario #1: Financing Benefits During Organizational Integration 

Having different employee benefits between organizations brings significant complexity when looking to integrate workforces. The cost of offering more generous benefits to the newly combined entity may be prohibitive. Organizations need to find ways to minimize costs while keeping employees engaged.

  • The Response:

    Alternative financing strategies can help employers find cost-efficient vehicles to mitigate rising costs. These strategies include multi-employer plans, multinational pooling and appropriate levels of stop-loss insurance.

    The entity should also review health programs with an eye for shared accountability, while also assessing health provider networks with a focus on high-quality providers and prevention programs. Doing so can help employers work toward sustainable healthcare costs.

    A health risk financing option can provide predictability and stability for organizations managing the budget risk of rising healthcare expenses. The benefits of such a solution are clear: optimized cash flow, predictability in budgeting and the ability to sustainably plan for the long term. It can also allow companies to fill coverage gaps by safeguarding against catastrophic risks. Using machine learning to predict future medical and pharmacy costs for the newly combined company is useful at this stage to understand the likely future volatility of medical costs.

  • The Opportunity:

    As an organization grows and changes, it presents an opportunity to consider how benefit plans are aligned and financed. Using captive reinsurance vehicles for financing employee benefits is becoming a more popular solution for managing costs, presenting a flexible and scalable alternative.

    Aligning benefits and pensions to priorities is another opportunity. Building a global benefits identity for the combined company that highlights its commitment to values and business outcomes can be a strategic advantage. By leveraging data and analytics to identify and prioritize what employees value and providing communications that drive employee engagement, an employer can build a global benefits identity that reflects their commitment to the combined workforce and improves overall wellbeing.

96%

of senior executives believe it’s likely or highly likely that companies will launch a strategic review of their company in the next 12 months.

Source: Aon and Mergermarket

Scenario #2: Optimizing Benefits through Collective Retirement Plans

When a company goes through a divestiture or spin-off resulting in a smaller company with fewer employees, replication of current plans may not be possible.

  • The Response:

    The resulting smaller entity can gain the economy of scale advantages of larger companies by joining a collective retirement plan, such as a pooled employer plan (PEP) in the U.S. or a master trust in the UK. These collective plans reduce administration costs and governance resources.

    Multinational companies can optimize their global benefits spend through alternative global financing vehicles and consolidation of vendors and global advisors. This helps to control and often reduce benefit costs and administrative burdens while still delivering critical retirement benefits.

  • The Opportunity:

    Collective retirement plans are rising in popularity due to their benefits of saving time, resources and money for employers and the ability to achieve desired financial targets. These benefits allow HR leaders to be more strategic. The improved cost savings and performance of a collective retirement plan can improve employees’ financial wellbeing, often resulting in higher engagement and productivity.

Scenario #3: Rethinking Benefits Based on Local Regulation

As companies go through organizational change, they must ensure benefit plan updates are reviewed with local laws in mind. For example, local legislation may require maintaining certain benefits, eligibility at certain levels or offering similar compensation and benefits to employees in similar roles. Similarly, companies may have different obligations related to unions, works councils or other contractual agreements. Pay transparency regulations will also soon demand that companies are able to explain pay gaps using objective criteria.

  • The Response:

    The resulting smaller entity can gain the economy of scale advantages of larger companies by joining a collective retirement plan, such as a pooled employer plan (PEP) in the U.S. or a master trust in the UK. These collective plans reduce administration costs and governance resources.

    Multinational companies can optimize their global benefits spend through alternative global financing vehicles and consolidation of vendors and global advisors. This helps to control and often reduce benefit costs and administrative burdens while still delivering critical retirement benefits.

  • The Opportunity:

    Collective retirement plans are rising in popularity due to their benefits of saving time, resources and money for employers and the ability to achieve desired financial targets. These benefits allow HR leaders to be more strategic. The improved cost savings and performance of a collective retirement plan can improve employees’ financial wellbeing, often resulting in higher engagement and productivity.

Scenario #4: Adapting to New Retirement Plans and Promoting Financial Wellbeing

Pensions warrant scrutiny during a transaction, given the pace of regulatory reform across Europe. With pension reform being discussed or already enacted in several countries across the EU and UK, employers need to be a step ahead in planning how a post-transaction entity will comply with evolving regulations.

  • The Response:

    The importance of preparation cannot be overstated. Starting early can identify roadblocks that could derail a transaction in the later stages. Ensure that previous commitments made to employees are being met, and that required contributions from the company are fully paid.

  • The Opportunity:

    Communicate to members that the resulting retirement plan will not decrease or weaken their benefits. This is a small but important first step. Maintaining that communication until the new plan is fully up and running is vital to protecting employee morale and engagement.

    Additionally, employers can use this as an opportunity to focus on employee financial wellbeing. Having a plan in place to help employees take full advantage of newly integrated pension or retirement plans, including things like automatic enrollment, will provide peace of mind in an otherwise uncertain time. But retirement savings are only one part of financial wellbeing. Many workers are more concerned about the present than the future. Going beyond retirement and pensions to provide planning and budgeting programs to help employees with their current financial wellbeing will help alleviate further stress.

76%

of employees say that employee benefits are important or extremely important to attracting them to their current job.

Source: Aon Employee Sentiment Survey

Quote icon

It shouldn’t be assumed that replication is the same as optimization. Going through organizational change can be an opportunity to implement better employee benefit programs.

Bruno Monteiro da Silva
Consulting and M&A Leader, Global Benefits, Europe, the Middle East and Africa

5 Quick M&A Transaction Tips

  1. Focus on business goals and the strategic fit of each entity's benefits to unlock deal value and ensure minimal disruption to the business.
  2. Rationalize alignment changes to minimize disruption in the short term. The medium and long-term intent is to harmonize total rewards structures.
  3. Plan to stagger implementation of changes. Avoid a "cliff event" based on internal readiness and employee perception.
  4. Any benefits changes should be thoughtfully and appropriately timed — from the announcement of the transaction to completion of transaction.
  5. Carefully evaluate all options based on cost, employee perception and administrative implications.
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These challenges aren’t just risk mitigation exercises. In each case there are opportunities to unlock long-term value.

Post M&A, the opportunity to reframe global benefits becomes a strategic imperative. Aon’s integrated model — world-class broking, strategic consulting, advanced analytics and technology — enables multinational employers to deliver benefits and pensions that are governance-ready and cost-effective, while remaining culturally attuned and performance-driven. In a world where benefits shape culture, define reputation and drive retention, the difference is not just what you deliver — it’s how.

Speak with your global broker and retirement advisor or contact us to learn how we can help.

Contact Us
Aon’s Thought Leaders
  • Alison Cosadinos
    Head of International Wealth, United Kingdom and Europe, the Middle East and Africa
  • Ben Simon
    Associate Partner, International Wealth, United Kingdom
  • Bruno Monteiro da Silva
    Consulting and M&A Leader, Global Benefits, Europe, the Middle East and Africa
  • Céline Ng Tong
    Global Business Development Director
  • Javier De La Serna Ciriza
    Consulting Leader, Global Benefits, North America

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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