Multiemployer Pension Plans in Business Transactions

This guide discusses multi-employer pension plans and their implications in business transactions. It outlines the differences between multi-employer plans and single employer defined benefit plans, highlighting the liability issues that can arise during business transactions involving these plans. Key areas of potential liability include withdrawal liability, which occurs when an employer ceases or reduces contributions to the plan, and obligations to make contributions as stipulated in collective bargaining agreements. The document explains the conditions under which withdrawal liability can be avoided and the responsibilities of both buyers and sellers in asset and stock transactions. It emphasizes the importance of due diligence for acquirers to assess the funding status of the plan and potential future liabilities. Additionally, it advises sellers to obtain estimates of withdrawal liability early in the process to strategically manage potential risks. The discussion aims to provide a foundational understanding for parties involved in transactions that include multi-employer pension plans.