Acquisition candidates that participate in multiemployer pension and health plans present additional risks that require thorough evaluation during due diligence. Multiemployer pension plans can carry greater risk than single-employer plans because other companies in a plan usually must assume additional financial liabilities if a member company cannot meet its contractual obligations. Similarly, multiemployer health and welfare (H&W) plans often carry greater risk because many have neither imposed meaningful cost sharing requirements on employees, nor reigned in costs and utilization levels as aggressively as single-employer health and welfare plans. Adding to the challenge is the difficulty acquirers typically encounter when trying to obtain accurate, timely information on the funded status of multiemployer plans.
Legislation currently before Congress is designed to improve transparency, strengthen processes for setting benefits and contribution rates, and make it more likely that plan sponsors will identify funding problems earlier and remediate them sooner.
Download 