INQUIRE BEFORE YOU ACQUIRE
Companies acquire other companies for a variety of reasons ranging from a desire to remove industry capacity to improving the performance of one or both companies. In any acquisition, the buying strategy must include a plan for increasing value or it’s not worth doing. Considering this goal, it behooves acquiring companies to determine if any conditions within the target company could offset the achieved value. Matters of unclaimed property present one such condition.
If unreported unclaimed property remains on the books of a company you hope to acquire, you take on all the problems associated with that condition, including the necessity of facing an audit. If you don’t ask, for all you know, the company you want to acquire already could be scheduled for an audit. Maybe the company has unclaimed property on the books, but no reserve to cover escheat—a liability that can take a substantial chunk out of potential profit.