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ARTICLE · 02 MARCH 2009

Managing Pension Risks In Corporate Transactions - Part 1

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Mergers and acquisitions can bring a host of pension and benefits issues to the surface. To minimize the risks associated with acquiring or divesting pension liabilities, each party to a corporate transaction must be aware of its options as well as the consequences that flow from each.

CanadaEmployment and HR

Article by Mitch Frazer, Torys LLP, and Jana Steele, Goodmans LLP

Contents

1.Introduction to Pension Plans

Types of Pension Plans

Defined Benefit Plan

Defined Contribution Plan

Multi-Employer Pension Plan

Funding of Pension Plan

Surpluses and Deficits in Pension Plans

Pension Plan Valuation

Nature of the Transaction

Share-Purchase Transactions

Mergers and Amalgamations

Asset-Purchase Transactions

2. Managing Pension Risks in Corporate Transactions

Due Diligence

Step 1: Signing a Confidentiality Agreement

Step 2: "Valuing" the Pension Plan

Step 3: The Seller's Obligations

Step 4: The Buyer's Obligations

Step 5: Signing a Letter of Intent

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