Don’t Let Unclaimed Property Sabotage Your M&A Deal

It may sound like an operational footnote, but mishandling unclaimed property obligations during an acquisition can result in years of inherited liabilities that blindside even seasoned deal teams. Once the ink dries, that oversight can quickly translate into audits, penalties, and write-downs.

What Is Unclaimed Property—and Why Should M&A Teams Care?

Unclaimed property includes things like uncashed vendor payments, dormant customer balances, unredeemed refunds, and other financial obligations a business owes but hasn’t resolved. States treat these as public property and require holders to report and remit them after a certain period.

The problem? These obligations rarely show up cleanly in financial statements, and their treatment varies widely by jurisdiction. That makes them a stealth liability—especially dangerous in M&A.

Deal Structure Doesn’t Eliminate Risk

It’s tempting to think you’re protected based on how a deal is structured, but that’s a risky assumption.

• In stock acquisitions, the buyer steps into the shoes of the seller—including unreported unclaimed property.

• In asset deals, buyers may believe they’re shielded—but that’s not always true. State laws and post-closing practices can still result in successor liability.

  
  

Even where legal liability doesn’t transfer automatically, enforcement efforts by states have become more aggressive, and many pursue entities based on successor principles, corporate continuity, or indirect ownership.

How to Spot Hidden Risk

Find the answers to the following questions:

• Are there old credits sitting in receivables systems?

• Are disbursement accounts cluttered with outstanding checks or unreconciled items?

• Has the target ever been audited for unclaimed property? If not, why not?

• Do policies exist for aging, voiding, and remitting unclaimed funds?

• Has the company engaged third-party consultants or filed voluntary disclosures?

Be Proactive

If unclaimed property didn’t get much attention during due diligence, don’t let it fall off the radar post-close. The early integration period is your best chance to uncover hidden issues—while legacy systems and former staff are still accessible.

A focused risk assessment right after closing can:

• Uncover previously unreported property

• Clarify compliance gaps

• Identify remediation paths or voluntary disclosure opportunities

Addressing this early can prevent future audit disruption and reduce financial impact.

Final Thoughts: Hidden Doesn’t Mean Harmless

Unclaimed property won’t make headlines in a transaction announcement. But left unchecked, it can derail financial projections, damage relationships with states, and lead to years of audit defense.

At Advisely, we help buyers and sellers navigate unclaimed property risk before and after deals close. Our approach combines technical compliance expertise with a practical understanding of the M&A process—ensuring your next acquisition doesn’t come with hidden baggage.

In M&A, what you don’t see can hurt you. Let us help you find it—before the states do.

Contact Eburke@adviselyllc.com today.