Legal Blog

M & A Nuggets: Accrued Leave

time offWhen conducting due diligence in connection with the purchase of a business, make sure that you understand the amount of accrued leave the seller’s employees have earned.   Otherwise, you could face a rocky start with the employees.  Many states require a company to pay employees accrued leave on termination of employment.  Aside from laws, many companies adopt policies by which accrued leave is paid at the end of employment.  There are many dynamics at play – a seller may have substantial accrued but unpaid leave on its books which it prefers not to pay on the transfer of its business; if the seller does pay the accrued leave, the employees may be under a misconception that they can still take vacation days and will expect to be paid for those days; it is also possible that a purchaser can be held liable for accrued pay as a successor.  The last thing you would want as a purchaser is to not account for accrued leave pay, and for your new employees to expect to take accrued vacation on your nickel.  It is therefore important that you understand the amount of the accrued leave, and then negotiate a resolution of that amount with the seller as an adjustment to the purchase price.

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ABOUT GLENN D. SOLOMON

Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With 120 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eight offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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