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M&A transactions often make perfect commercial sense for the primary parties involved. However, in our experience we often find that issues relating to pension schemes can be overlooked, when actually they are frequently the largest liability involved in the deal.
We are able to assist trustees in making sense of what these transactions may mean for the covenant; and employers understand likely trustee reactions and, crucially, what their negotiating positions may be.
Trusted advice on the impacts of corporate activity
In the case of a corporate transaction, trustees and employers need to understand whether it could be considered a so-called 'Type A' event by the Pensions Regulator, defined as one which might result in 'material detriment' to the scheme. In such a situation, trustees need assistance in identifying and negotiating appropriate mitigation with the employer.
Our team of specialist advisers includes professionals with extensive experience of assessing the covenant impact of such transactions. We have a proven track record in negotiations between trustees, employers, lenders, tPR and the Pension Protection Fund (PPF).
We also have qualified pensions actuaries in the team, who specialise in providing scheme specific due diligence for both vendors or purchasers. Through such work, and subsequent advice on negotiating strategies, we can assist in the protection of value or suitable pricing reductions in deals.
We offer services to both trustees and the corporate sponsors of pension schemes:
- assessment of the impact on the covenant of a corporate transaction, refinancing or reorganisation
- advice on clearance applications
- entity priority modelling
- consideration of either trustee or employer leverage in deals
- negotiation assistance for mitigation
- consideration of the covenant aspects of proposed apportionment arrangements