Valuation terms

Pension commitments can materially affect a business valuation. A review must examine the benefits promised, the liabilities recognized, and the assets available to fund them. The balance sheet amount is not automatically the amount to deduct in a transaction.

Underfunded obligations may require an adjustment when reconciling enterprise value to equity value. Their treatment depends on the terms of the commitment and the agreed valuation basis. Insurance or another funding arrangement does not remove the need for review.