Why do defined contribution plans have no effect on enterprise value? The pension expense would reduce net income and thus also the resulting free cash flows for the company. Why then, according to several articles, do they have no effect on EV and the defined benefit plans have an impact?
| +269 | Earliest you can get fired | 58 | 14h |
| +251 | UBS’s M&A BANKERS ARE DOING TERRIBLY. $200M EXTRA IS BEING CUT | 47 | 18h |
| +238 | Investment Banking is Divine | 40 | 10h |
| +223 | Career Crossroads | 31 | 1d |
| +213 | US 2027 SA IB worried about background check | 53 | 7h |
| +207 | Another $115bn Mega deal for these banks. Congrats! | 45 | 11h |
| +206 | Analyst: Why is UBS IB doing worse than peers?, UBS CFO: No Comment | 41 | 1d |
| +122 | Is UBS really that bad? | 38 | 9h |
| +39 | Is Houston SA 28 recruiting already over? | 33 | 12h |
| +26 | 2026-27 IB Energy Top Banks | 8 | 13h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Pension liabilities most of the time are considered debt like items and will influence your bridge. The contribution they make on a specific year won't accumulate and is specific to a specific year.
But for a defined pension contribution plan, no liabilities are formed; the pension payments are simply recognized as an expense in the P&L. Only in the case of a defined benefit plan is a pension provision recognized, which increases the net debt. Or have I misunderstood this?
Vel nobis numquam explicabo tempore culpa. Quos aut placeat soluta adipisci.
Ea minima sed repellendus. Est sint temporibus voluptatem dignissimos ut suscipit voluptas nihil.
Aliquid id praesentium laborum voluptatem magnam. Architecto labore explicabo modi voluptatum et molestias. Harum minus est harum laboriosam voluptatem nobis.
Harum provident omnis eum repellendus. Atque ut illo deserunt maiores ullam sed quos. Architecto excepturi rem iure ducimus minus voluptates labore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...