Valuing Pension Plans in Mergers and Acquisitions: Which Method to Choose?

During the past five years, pension plan sponsors in the United States have dealt with another perfect storm of pension financial volatility, with large swings in asset returns and high-quality corporate bond rates trending to historic lows. These factors have contributed to erratic profit and loss (P&L), balance sheet volatility, and material increases in cash costs. In the mergers and acquisitions (M&A) world, putting the right value on a company's defined benefit plans can be the difference between a successful transaction and one that fails to meet objectives.