Corporate events for Corporate Finance services
Defined benefit (DB) pension schemes can be one of the largest stakeholders of a company and their size and risks are rarely publicly disclosed. Understanding and managing the true position of the scheme can unlock value in a corporate deal.
Dealing with complexity and time pressure
The legislation on DB pensions is complex: the ‘right’ answer is never clear and is often situation-specific. The new Pension Schemes Act 2021 also brings the threat of civil and criminal sanctions to directors and advisors, with stronger powers for the UK Pensions Regulator to intervene.
This doesn’t apply only to big-ticket M&A activity, but also to dividends, refinancings and tax restructurings. This risk must be actively managed. Corporate finance and restructuring skillsets are required to consider the ongoing impact of a transaction on covenant.
Engaging with trustees and regulators takes time and brings deal completion risk – identifying scheme issues and proactively engaging early with stakeholders is a must.
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