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Is
the workers’ compensation experience an asset
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or a liability?
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A
True Story:
A couple purchased a towing company including its equipment,
location, client list and employees. They were surprised to
find out that old workers’ compensation claims had transferred
to them. They were even more surprised to hear from an attorney
who said they had to provide a job for someone who was out
on disability when they bought the company. The buyers had
never heard of this person, so did they really have to employ
him? This
couple bought a pig in a poke.
| Due
diligence is the process of investigating
what you are thinking of buying. If it’s a company,
you call the names on the client list to find out how
much business they really do with the seller, your mechanic
inspects the machinery, your accountant looks at the financials,
and your lawyer researches the intellectual property.
ActuComp can tell you about the seller’s experience
and project its impact on your premiums.
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| Regulation
Change |
| As
of September 1, 2007, the workers’
compensation experience
will transfer from the seller to the buyer, regardless
of whether the transaction is a so-called asset
transfer. If you buy a portion of a business, the
payroll and claims history for that portion of the
business will transfer to the buyer. |
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Buyers,
do you want to:
Negotiate a fair price for the business,
or pay too much and then continue to pay to manage
hidden problems?
Be prepared to handle existing issues, or
be surprised after the sale is finalized?
Concentrate on running your new business, or
be distracted by claims and paying increasing premiums?
*
highlighted terms may
be found on our Definitions page |
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