Pension Due Diligence
A good due diligence investigation with mergers and acquisitions is an absolute must. Pension is an important part of due diligence but that is frequently forgotten.
With mergers and acquisitions, the buyer does not want to be surprised by extra, unforeseen costs. And the buyer does not want to be surprised by claims from the past.
But very often, it has happened that Dutch pension forms a sudden, unexpected big financial risk. Not just regarding value transfers, but also in relation to other pension problems. For example, has there been done enough investigation of possible premium payment arrears. And are potential claims of employees regarding pension commitments or (other) communicated remarks lurking? Where has the pension plan been laid, and are there exit-regulations in the implementation agreement with the pension executer? And lastly: has there been an Dutch industry-wide pension fund check? So, has it been investigated if there may be an obliged participation in an industry-wide pension fund?
Dutch pension plans are and will stay a complex whole of additional rules, obligations and executions. For entrepreneurs and investors, but also for the financial advisors and lawyers that are involved in a merger or an acquisition. We notice often enough that support by specialists in the field of Dutch pension is a valuable complement to the common due diligence. Something that will eventually benefit both parties.
What do we offer?
With a merger or an acquisition there are often some catches in the deal. Also regarding pensions. That is why it is important to conduct a due diligence pension investigation. Next to other things, we check upon the following:
- Is the commitment to the employees a defined benefit or a defined contribution policy?
- What is the calculated value of the pension commitments?
- Within the company, are the right parameters and assumptions used regarding indexation and actuarial interest rate, for example?
- Does the company have to enter the industry-wide pension fund or even change pension funds after a fusion?
- Are there possibilities for a harmonisation of the terms of employments, under which pension plans?
- Does the original pension plan have to stay as it is after an merger or acquisition?
- How does the valuation model concerning pension obligations look, and which value does the company bring back?
- Does the pension plans have to be laid with the original pension executer or can the buyer change this?
- Is the administration of the pension executer fully correct and up-to-date?
- What are the conditions of the execution agreement with the current pension executer and can this, for example, be cancelled provisionally?
- Are all pension plans within the company mapped and communicated well with the employees?
- Is there a premium payment arrear? And a correct and up-to-date information flow to the pension executer?
The selling party, as well as the buying party need answers to these questions before they decide to march down this road. Therefore, it is important to realize the impacts of pension obligations. Fast and flexible, we help companies in the netherlands and international investors with Due Diligence Pension.
Contact us for more information or an appointment.