be found to make the cover worth paying for. Clients are saying they have done the work and do not then want to pay the extra 1% to 2% because they have done enough. Cusack: We always think we do the work, but experience shows that something comes out of leftfield or someone does not have the right information. Pickering: I have a client who invented the paperless office before the computer came along. There is a lot of “you will be okay; you have this entitlement”. No mat- ter how much due diligence we do, we will not avoid a disenchanted executive saying they had a promise that we have not kept.” Hartree: It is part of seeing the end from the beginning and going on a journey with the sponsor. Do they understand that after the deal has been done that it is not the end of the matter? Alongside that, who is advising the spon- sor? We expect that their corporate advis- ers need to do their job.


What will make this run smoothly is tag teaming. Your advisers are talking to their advisers, your lawyers are talking to the sponsor’s lawyers. It is like a three-legged race which we are all trying to get to the end of. Cusack: It does not always work in prac- tice. Our lawyers may not like the sponsor’s lawyers, for example. Hartree: The trustees can then have a role in making people play nicely. Cusack: But what if the trustees believe they are in a position to buyout and the sponsor is not engaging? Do the trustees sit on their hands and manage the scheme indefinitely incurring costs or do they go to buyout if it will not cost the sponsor? Hartree: I wouldn’t recommend it because you will come unstuck at some point. It comes down to does the sponsor understand where the balance of power lies. Pickering: It goes back to making sure the employer is properly tooled up. It might be that their existing adviser relationship is not appropriate, particularly if it is a small company. That is one of the good things about the regulator guidance for consolidators. They have to make sure employers are not receiving advice from someone in Guildford high street who spends most of their time giving divorce guidance. They will be


12 July–August 2022 portfolio institutional roundtable: Endgame investing


out of their depth on this and you have to warn the employer that they are not working with the right team.


Does the size of the scheme make a difference when trying to attract an insurer? Quarmby: Insurers often prefer larger schemes. There can be various reasons why but one reason is that part of their work is fixed, and therefore does not vary too much depending on the size of the scheme. For smaller schemes – those below £100m – the challenge is getting enough insurers to quote and to negotiate an attractive price and favourable commercial terms. That comes down to getting the attention of insurers, which is the real challenge. Some of the smaller schemes are not necessarily that simple. For example, they may have complicated benefits. These schemes have to work even harder to get insurer engagement. Barron: What is the answer? What can they do? Quarmby: It is about streamlining the transaction as much as


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