Transaction advisory services
The DB scheme continues to be a key stakeholder for businesses
Defined benefit (DB) pension schemes can be one of the largest stakeholders of a company and the scale of the underlying obligations and risks are rarely publicly available. Understanding and managing the true position of the scheme can unlock value in a corporate deal.
Since September 2022, there have been significant improvements in scheme funding levels, however the pensions stakeholder remains no less important during corporate activity.
This continues to be driven by the Pension Schemes Act 2021 (“PSA21”), which places greater demands on directors and advisors, including introducing the threat of civil and criminal sanctions, and stronger powers for the UK Pensions Regulator.
Importantly, PSA21 covers a broad range of corporate activity – not just M&A activity, but also ordinary course activity such as dividends, refinancings and corporate reorganisations.
Planning and early engagement with the Trustees can unlock value
On corporate transactions, planning and early engagement with the scheme trustees remains key to delivering a successful outcome for all parties and mitigating deal completion risk.
More broadly, transactions present a new opportunity for the company’s management team to re-engage with the scheme trustees on the scheme’s funding and investment strategy and trajectory, whilst addressing any impact on the employer covenant. This can unlock value for the business, whilst also protecting member benefits.
For well-funded schemes, corporate transactions can also provide the ideal opportunity to accelerate the path to the scheme’s ultimate end-game, and, where appropriate, transfer risk to a third party like an insurer.
How Cardano can help
Joined-up, independent advice from experienced professionals
- We bring a blend of corporate finance, pensions and investment expertise – we understand the corporate agenda and how to align the pension scheme strategy with your broader capital allocation and strategy.
- We are experienced at advising on the full range of corporate transactions, from large-scale, listed M&A to mid-market transactions, across a range of stakeholders, covering investors, corporates, company directors, and lenders.
- We are skilled at working closely with other financial advisors (such as investment banks) and lawyers to ensure we deliver joined-up advice to reach the optimal outcome from the deal.
- We bring a unique insight into the pension scheme as a stakeholder – we advise over 300 pension schemes, giving us a thorough understanding of the trustee mindset and approach to risk.
How Cardano can help
Joined-up, independent advice from experienced professionals
- We bring a blend of corporate finance, pensions and investment expertise – we understand the corporate agenda and how to align the pension scheme strategy with your broader capital allocation and strategy.
- We are experienced at advising on the full range of corporate transactions, from large-scale, listed M&A to mid-market transactions, across a range of stakeholders, covering investors, corporates, company directors, and lenders.
- We are skilled at working closely with other financial advisors (such as investment banks) and lawyers to ensure we deliver joined-up advice to reach the optimal outcome from the deal.
- We bring a unique insight into the pension scheme as a stakeholder – we advise over 300 pension schemes, giving us a thorough understanding of the trustee mindset and approach to risk.
Our services
Our services for corporate events
- We are a strategic advisor that has guided companies through commercial negotiations with pension scheme trustees during fast-paced and complex corporate transactions, including mergers and acquisitions, disposals and restructurings.
- During a transaction, we will help you to pre-empt potential trustee concerns around the covenant implications of the deal, help you to structure mitigation that addresses concerns and meets regulatory best practice, as well as supporting you in your negotiations with the pension trustees
- We focus on thoughtful stakeholder management, and will help you to engage with the broader pension stakeholders, including The Pensions Regulator, as well as gaining the support of your key corporate stakeholders, by bringing them on the journey with us
- We help you to mitigate any potential regulatory risk – we have over 300 pension scheme clients and are well placed to advise you on the Pensions Regulator’s ability to impose a Contribution Notice or Financial Support Direction, and provide you with the necessary audit trail for addressing any potential future regulatory challenge e.g. helping to put in place a Statutory Defence where needed.
Our services
Our services for corporate events
- We are a strategic advisor that has guided companies through commercial negotiations with pension scheme trustees during fast-paced and complex corporate transactions, including mergers and acquisitions, disposals and restructurings.
- During a transaction, we will help you to pre-empt potential trustee concerns around the covenant implications of the deal, help you to structure mitigation that addresses concerns and meets regulatory best practice, as well as supporting you in your negotiations with the pension trustees
- We focus on thoughtful stakeholder management, and will help you to engage with the broader pension stakeholders, including The Pensions Regulator, as well as gaining the support of your key corporate stakeholders, by bringing them on the journey with us
- We help you to mitigate any potential regulatory risk – we have over 300 pension scheme clients and are well placed to advise you on the Pensions Regulator’s ability to impose a Contribution Notice or Financial Support Direction, and provide you with the necessary audit trail for addressing any potential future regulatory challenge e.g. helping to put in place a Statutory Defence where needed.
We appointed Cardano as our sponsor covenant adviser to engage in a cross-border and highly complex M&A process where multiple stakeholders held differing viewpoints. Their work, in conjunction with the trustee advisers, included pre- and post-transaction covenant analysis, entity priority modelling and an assessment of and advice around moral hazard issues. I found their work exemplary and would not hesitate to recommend them to anyone else in a similar situation.
Andrew Nelson, Chief Financial Officer, Amey
Our new 2023 CFO report
New world, new decisions
Our new report, New world, new decisions, reveals proprietary insights into key areas of interest to UK CFOs and senior executives on the challenges and opportunities for their Defined Benefit (DB) pension schemes. This comes at a time where improved funding positions and burgeoning pension surpluses has created a new set of dilemmas for corporates.
