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M&A: Watch out for pension plans

Pension plans in M&A transactions can be problematic if not dealt with properly. Here are some things to consider.

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two cliffs with faces on them and arrows merging at their top Let’s take a look at the path to fully terminate a pension plan in a M&A transaction and the timing considerations for going down this road. (Photo: Shutterstock)

M&A transactions that involve defined benefit pension plans can be tricky. First, due diligence and pricing the risk associated with the plan can be difficult. Second, managing the plan after the transaction can be complicated.

For many CFOs, the optimal answer would be to eliminate the plan and not deal with a long-term, volatile liability on the books, distracting and often complicated plan administration and a potential cash drain for the organization.

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