HR Due Diligence: Why Employee Benefits Shouldn’t Be Overlooked

How understanding your benefits position protects your business during mergers, acquisitions, and restructures

When businesses change hands - whether through a sale, acquisition, or merger - most attention goes to financials, contracts, and compliance.

But one area that can quietly create risk (or opportunity) is employee benefits.

Group insurance, private healthcare, and wellbeing programmes may seem like small details, but they carry legal, financial, and cultural implications.

Overlook them, and you risk unexpected costs, duplicated schemes, or loss of employee trust.

Get them right, and they help ensure a smoother transition for everyone involved.

At Excellect, we support organisations and their advisers in reviewing and aligning benefits as part of wider HR due diligence - giving clarity, compliance, and confidence throughout the process.

What Is HR Due Diligence?

HR due diligence is the process of reviewing all people-related aspects of a business during a transaction or restructuring.

It typically includes:

• Contracts and employment terms

• Payroll, pensions, and compliance

• Employee demographics and structure

• Employee benefits, health, and wellbeing provisions

The goal is simple: to understand what you’re inheriting, what your obligations are, and where any potential risks or liabilities might exist.

Why Employee Benefits Deserve Attention

1. Hidden Liabilities

Unreviewed benefits can mask hidden costs.

Duplicate life insurance, PMI, or income protection policies can inflate premiums unnecessarily - or leave gaps in cover.

2. Continuity and Compliance

If benefits aren’t correctly transferred or renewed, employees can lose cover during the changeover - exposing the business to compliance or reputational risks.

3. Cultural Integration

Benefits send a powerful message about how a company values its people.

When two organisations come together, aligning benefits helps unify culture and build trust.

4. Contractual Obligations

Certain benefits are contractual rather than discretionary.

Failing to recognise or maintain these can result in employee disputes or legal exposure.

5. Valuation and Negotiation Leverage

Understanding benefit costs and liabilities supports accurate business valuation and negotiation - a key advantage during M&A discussions.

The Role of a Benefits Broker in HR Due Diligence

At Excellect, we help identify and address benefit-related risks during organisational change.

Our approach includes:

1. Pre-Transaction Audit

We review all existing schemes, costs, and provider contracts to provide a clear view of liabilities and obligations.

2. Integration Planning

We support advisers and HR teams in planning how to align or consolidate benefits post-transaction.

3. Regulatory and Compliance Guidance

As an FCA-regulated consultancy, we ensure all transitions meet UK regulatory and insurer requirements.

4. Employee Communication

We help employers craft clear communications to reassure staff and maintain engagement during uncertain times.

5. Post-Deal Support

Once the deal is complete, we manage renewals, transitions, and ongoing administration - ensuring benefits remain compliant and cost-effective.

A Practical Example

A financial services firm acquires a smaller regional company with 60 employees.

During due diligence, Excellect identifies:

• Two group life schemes overlapping for some employees

• A health cash plan that wasn’t renewing in line with other benefits

• An EAP not compliant with new data protection requirements

By flagging these early, the acquiring company can:

• Avoid double-paying premiums

• Maintain continuous cover

• Communicate clear updates to employees from day one

The result: no disruption, no unexpected costs, and a seamless transition.

Benefits of Including Excellect in the Process

Objective	Outcome
Identify liabilities early	Prevents costly oversights
Improve financial accuracy	Supports fair valuations
Maintain employee confidence	Reduces uncertainty and turnover risk
Ensure compliance	Meets FCA and employment law requirements
Create integration clarity	Simplifies post-deal HR management

Whether you’re a business owner preparing to sell, an HR director overseeing a restructure, or a professional adviser supporting a transaction, including a benefits review adds valuable clarity to the process.

Final Thoughts

HR due diligence isn’t just about numbers - it’s about people.

Employee benefits are part of your organisation’s promise to its team, and they deserve the same attention as any other business asset during change.

At Excellect, we help ensure that every benefits-related detail is clear, compliant, and aligned - so you can move forward with confidence.

Speak to Excellect to discuss how we can support your next merger, acquisition, or restructuring process.