Corporate activity and transactions

Defined benefit (DB) pension schemes can be a bit of a mystery in a transaction situation, particularly for purchasers who do not have DB arrangements of their own. Given the potential significance, it is vital to get thorough pensions due diligence done at the time to assess the risks that the scheme brings to the table and the impact this will have on the value of the deal.

Any corporate activity with the potential to be ‘materially detrimental’ to the ability of a DB scheme to meet its liabilities can lead to the Pensions Regulator (TPR) exercising their anti-avoidance powers which can be very penal. It is vital to be aware of the risks inherent in any such activity and, if it is decided to proceed, to mitigate them as far as possible.

Our experienced DB pension consultancy team offers a fresh approach to providing pensions advice around events and in transaction situations. Our specialist pensions professionals also have a deep understanding of employer objectives and the wider business environment in which organisations operate. 

We have considerable experience in advising on ‘clearance’ and dealing with TPR. We also provide clear and concise vendor or purchaser due diligence services which will vary depending on the needs of the two parties. We are alert to potentially 'hidden' liabilities and provide clear communications on complex pensions issues to provide clients with sound and pragmatic advice.

Some of our recent client work in this area is as follows:

• We provided due diligence advice to a major overseas multinational company considering the acquisition of a FTSE 100 company with significant DB pension obligations in the UK; and
• We provided due diligence advice to lending parties in respect of a UK client carrying out a significant debt refinancing exercise.

We are well placed to provide:

• Due diligence advice on the pensions aspects of any transaction;
• Pension risk assessments of proposed corporate activity, including liaison with TPR where appropriate;
• Funding support and risk management post-transaction; and
• Advice on pensions strategy for transactions involving distressed companies.