Survey finds pensions plan liabilities making CFOs wary of mergers and acquisitions
Almost half (47%) of FTSE350 chief financial officers (CFO) say that pension liabilities at companies they are considering buying or merging with represent major obstacles to successfully completing M&A deals, according to a new survey from Towers Perrin's HR Services business.
The finding, based on responses from 70 CFOs, shows that companies' M&A ambitions are being severely impacted by pension liabilities. To avoid problems later on, CFOs and their advisers must therefore conduct thorough due diligence in the run-up to M&A deals in order to identify and assess the potential financial liabilities in pension programmes. Without doing this they risk spending a lot of time and money doing M&A deals, only to discover later on that the deals do little to enhance financial performance, or worse still, they may damage performance.
?CFOs should be aware when they embark on M&A projects of the potential pension liability problems that could surface,? says Marco Boschetti, principal at Towers Perrin. Focusing solely on traditional pensions accounting due diligence can materially weaken M&A success ? companies' Human Resources teams must also be fully included in the process to consider the potential people issues associated with deals.?