Pensions remain a key issue for potential acquirers, and sellers, when considering corporate activity. Those involved in Mergers & Acquisitions need to ensure they approach any deal with their eyes wide open to the possible issues.
It’s imperative to have a strong understanding of the expected cost, as well as the range of possible financial outcomes, for any material Defined Benefit (DB) schemes. The figures disclosed in statutory accounts provide a starting point but do not indicate future cash commitments.
A key consideration is whether any corporate changes could trigger an employer debt payment, where there are changes in the entities directly supporting a DB scheme.
In the UK, it’s also notable that deal discussions can become a three-way conversation. Pension scheme trustees have been given significant powers and responsibilities in the context of a potential acquisition and any purchaser or seller will wish to avoid intervention from the Pensions Regulator.
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