Pensions due diligence in share sales—an introduction
Pensions due diligence in share sales—an introduction

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • Pensions due diligence in share sales—an introduction
  • The purpose of due diligence
  • Scope of due diligence
  • Due diligence questionnaire
  • Due diligence report
  • Relationship with warranties and indemnities
  • Due diligence issues specific to the seller

THIS PRACTICE NOTE APPLIES TO ALL PRIVATE SECTOR PENSION SCHEMES

In a share sale, the buyer purchases the issued share capital of the target company. Through this acquisition, the buyer is commercially impacted by the contracts and deeds entered into by the target company. Moreover, the acquisition of the target does not change the contracts of employment the target company has agreed with its employees: the rights of both the target company and its employees continue irrespective of the target's change of ownership.

This Practice Note summarises the pensions aspects of the due diligence carried out by the buyer in a share sale. For a detailed review of the due diligence issues that may arise where the target company:

  1. participates in a defined benefit (DB) arrangement, see Practice Note: Pensions due diligence in share sales—issues specific to DB schemes

  2. participates or contributes to a defined contribution (DC) arrangement, see Practice Note: Pensions due diligence in share sales—issues specific to DC schemes

The purpose of due diligence

Due diligence is the process by which a buyer obtains information on the target company and any subsidiaries it may have. Lawyers acting on behalf of the buyer are often given access to an actual or virtual data room which holds copies of documents providing information on the target company. Lawyers analyse the documents