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Professional employer organizations (PEOs) are a common method for small and mid-sized employers, or multi-national businesses with a smaller US presence, to obtain comprehensive payroll, human resources, and employee benefits services. When a company relies on the services of a PEO and that company is part of an M&A transaction, there are a variety of considerations that should be taken into account, including PEO contracts, 401(k) plan spinoffs and terminations, health coverage, payroll transitions, and purchase agreement provisions. Buyers may also want to enter into a PEO arrangement post-closing as an expedient way to provide human resources services and benefit plans to target employees post-closing.

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