Delivering the Deal
Managing the risk of retirement plans on M&A deals
March 28, 2023 | Episode 14 | 14:52
The “Delivering the Deal” spotlight series is where Mercer’s leading experts discuss the most pressing issues facing business leaders and deal professionals in M&A today.
While defined contribution plans are the primary source of retirement benefits in the US, 75% of large employers (i.e. 1000+ employees) have DB pension plans with the majority closed to new employees. In this episode, Scott Jarboe, Mercer Wealth’s Defined Benefit Segment Leader for the US and Alla Iagniatinskaia a Senior Principal in Mercer’s M&A Advisory Services Team share ideas to properly manage retirement plans in a transaction so they do not disrupt your deal.
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Interesting moments:
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"Buyers who recognise that pensions are long-term commitments and remain focused on pension risk management after the transaction is closed are ultimately the ones who are able to achieve their desired outcome from the deal."
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"You want to make sure that all material DB plans globally are reported in the company’s financial statements, that they are evaluated adequately, that you have a complete description of the plan offered, who is eligible for it, and how it is measured. This is critical to avoid any surprise discoveries later. "
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"In US, the 401k plan are now the primary source of the retirement benefits. But they do present their own set of risks and challenges for the buyers. There have been a number of ERISA class action lawsuits filed in connection with retirement plans with the top ten settlements for 2021 alone of over $800 million."
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