Acquiring a new company is an immensely exciting time for the business doing so. It is a time of expansion and opportunity, allowing that business to serve more consumers over a greater distance.
However, many businesses fail to realize when they acquire another company this is not the only type of growth they may exhibit. Their unclaimed property liability has the opportunity to grow exponentially as well.
When it comes to acquiring another company, the business doing so must be aware of the potential of this occurring. Depending upon the type of acquisition, the business acquiring the other company could suddenly be at risk for an undisclosed unclaimed property liability.
Therefore, it is extremely important for businesses looking to acquire other companies to thoroughly review their unclaimed property reporting history. Whether the company being acquired has a reporting history or not, the acquiring business should make this research process part of their due diligence whenever they are performing an acquisition.
Unfortunately, sometimes the companies that businesses are looking at acquiring have a reporting history but are not completely compliant with unclaimed property rules and regulations. This means these companies may not have reported unclaimed property to all of the states they needed to each year. It may also mean they have not completed the reporting process correctly and, therefore, are not in compliance with all applicable reporting jurisdictions.
Financial institutions, in particular, are more likely to experience this. These institutions frequently undergo mergers and acquisitions. As a result, finding an existing unclaimed property liability is immensely common.
However, more often than not, the acquiring bank does not realize the institution being acquired has an unclaimed property liability until the time of conversion. This is when all data from the acquired institution is combined with the acquiring bank’s data on its core system. Once this occurs, the acquired institution’s unclaimed property liability becomes noticeable. At this point, the acquiring bank has no choice but to work to resolve the liability they have just acquired as well in order to be compliant once again.
Also, it is important for businesses looking to acquire other companies to note that those that have neglected their unclaimed property reporting liabilities may not be reporting other information as well. Specifically, companies writing off these liabilities may be overstating their revenue. This means they may be exaggerating how successful their company is, misleading any other business that is considering acquiring it. If this is the case, the acquiring company may be left with a less successful business than expected as well as a huge unclaimed property liability.
Therefore, it is immensely important for businesses looking to acquire other companies to make evaluating their unclaimed property reporting compliance part of their due diligence process. A review of the company’s unclaimed reporting history that a business is considering acquiring is extremely helpful in determining if there is a possibility of a liability. Luckily, Dunbar can simplify this process for businesses. Our experienced consultants can perform this review of any companies that a particular business is contemplating acquiring. This takes the pressure and responsibility off these businesses to do so and ensure any and all outstanding unclaimed property reporting liabilities are found promptly identified.
However, if businesses do not perform this review and end up acquiring a substantial liability, they do not need to panic. They have options to mitigate and resolve it while avoiding penalties and interest. Dubar can also help these businesses with this process. Our team will work with each business to help it evaluate the unclaimed property liability and determine the best course of action for handling it while also ensuring it does not face any penalties.
The world of unclaimed property can be tricky and confusing, especially when it comes to acquisitions. However, Dubar firmly believes this should not prevent businesses from moving forward with acquiring other companies. Our consultants are here to help businesses ensure they can successfully carry out any acquisitions they desire while also avoiding acquiring a huge unclaimed property liability. In doing so, Dunbar wants to help businesses grow and thrive while eliminating the fear of becoming non-compliant.
Dunbar is a reputable provider of unclaimed property compliance services, offering a comprehensive suite of solutions to help organizations remain compliant with all applicable laws. With a professional team with decades of experience, Dunbar is the ideal choice for businesses seeking a reliable and knowledgeable provider for their unclaimed property compliance needs.
