Where do you see yourself in five years?

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Michael Nelson, Consulting Analyst, the Principal Financial Group

As a semi-recent college graduate, I’ve faced the daunting question, “So where do you see yourself in five years?,” in more than a few job interviews. Walking the line between a profound answer that displays drive and ambition without leaving the interviewer wanting to serve me a slice of humble pie was something I struggled with, regularly. The movie that played out in my imagination had me quickly responding with something clever and witty like “interviewing you for a job.” Let this blog post serve as proof I didn’t go with that response.

The question did get me thinking about my goals; what are my goals, personally and professionally? What would it take to achieve these goals? What details am I not thinking about, initially? While no crystal ball exists to magically deliver these answers, choices will be presented that dictate a path.

In a similar manner, if a buyer is looking to purchase a company through an asset transaction, a buyer will have choices about which assets of a selling company they want to purchase and, rarely, which liabilities they are willing to take on. These choices generally dictate the path of the acquisition. One of the details that is sometimes overlooked is the seller’s retirement plan, one of those liabilities that are often seen as ‘unattractive’ to buyers. More pressing questions should be raised: where do you see the retirement plan(s) after the asset purchase?

  • When’s the transaction date: discussions should be held prior to the purchase date as this is a key date for retirement plans. Options can change based on pre/post executions around the asset transaction date.
  • How many plans will exist: operating one or multiple plans are options in an asset transaction. It’s important to be cognizant of pros and cons prior to making a decision.
  • What’s the Buy-Sell agreement say: the final decisions around the operation of the seller’s retirement plan(s) moving forward should be addressed here.

Once these decisions have been made, it will be important to effectively communicate the changes to participants. A campaign that provides adequate notice, discloses all options, and informs of potential blackout periods can further ease participants through the transaction.

The goals that seemed to be five years away just yesterday get closer and closer with each passing day. It’s easy to think of where I want to be, the hard part is making the choices to arrive there and sifting through the available options. Involving individuals with retirement plan expertise to help ensure you’ve explored all options while navigating through an asset transaction can help make your goals a reality.

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The subject matter in this communication is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group®, (The Principal®), Des Moines, IA 50392.