Case study: Acquiring a multinational business with significant pension obligations

Working to tight deadlines, our team helped a multinational business understand their potential pension exposure and model DB pension costs allowing them to quickly decide whether to proceed with the acquisition.

Challenge

• Reviewing pension matters associated with the purchase of a business with significant pension liabilities
• The client’s key concern was the expected cash cost of the UK pension plan.

Solution

• Advised stakeholders on the UK and Swiss pensions arrangements, including the associated risks, as well as market practice for funding and investment
• Developed a strategy regarding these matters post-transaction and gained a full understanding of their potential exposure.

Results

Following our initial advice, we analysed a number of DB pension cashflow scenarios. This allowed the client to integrate these scenarios with their valuation model for the business. They were then able to quickly make an informed decision on whether to proceed, based on their preferred approach to pension funding post-purchase.

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Case study: Private equity firm looking to acquire division of U.S. defence contractor

Our team helped a private equity firm understand the potential benefit obligations, risks and assets associated with the acquisition of a division of a U.S. defence contractor.

Challenge

• Assess financial and non-financial risks in significant retirement and healthcare plans
• Help client decide whether to take legacy pension and retiree medical, and negotiate with unions.

Solution

• Perform independent financial analysis of plans (liquidation basis)
• Estimate cost of health and other welfare benefits
• Review sale agreement.

Results

Successfully negotiated an agreement to keep union benefits whole through a new carve-out pension plan, in a financially sustainable and low risk manner. This meant our client was able to retain talent that was critical to the success of their business posttransaction.