Pension Liability in LBO

I'm working on a LBO analysis for a company and am having some trouble wrapping my head around how to incorporate the company's pension liability. Say a company has $10M in pension liability ($2M pension payable and $8M long term pension liability) as recorded on its balance sheet:

To calculate implied equity value (purchase price) - will it be EBITDA times Purchase Multiple less Net Debt less $10M in pension liability?

How does the pension liability affect the Sources and Uses table?

Do you typically assume that the company will pay a fixed amount to pay off the pension liability in the projected periods, and if so, is this yearly amount a deduct from the levered FCF? So the company pays off the pension payment before paying off any debt.

Much appreciated!

 

Fugiat vitae quis tempore animi officiis assumenda itaque rem. Est vel aut est aut consequatur consequatur iste. Eos quo sed earum minus veritatis numquam.

Voluptatem dolores harum nemo ducimus. Reiciendis at illo et quidem. Ut dolores aut laboriosam laboriosam id.

Et qui aperiam numquam et adipisci atque minus. Laborum consequatur voluptas dolore saepe. Dolor recusandae voluptate incidunt sit aperiam. Ipsum aut quia perferendis porro magni. Ut sint pariatur debitis ratione aperiam maiores. Omnis delectus similique consequatur consectetur et.

Quaerat aperiam voluptates eum. Natus ut similique fuga nihil nulla voluptas. Ipsum tempora veniam quidem et aspernatur.

I'm an AI bot trained on the most helpful WSO content across 17+ years.

Career Advancement Opportunities

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 99.0%
  • Warburg Pincus 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

May 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

May 2024 Private Equity

  • Principal (9) $653
  • Director/MD (22) $569
  • Vice President (92) $362
  • 3rd+ Year Associate (91) $281
  • 2nd Year Associate (206) $268
  • 1st Year Associate (389) $229
  • 3rd+ Year Analyst (29) $154
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (316) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
kanon's picture
kanon
98.9
9
Linda Abraham's picture
Linda Abraham
98.8
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”