Given the current activity from private equity clients, the news last week that the Government is suspending controversial rules aimed at protecting pension funds is being met with a sigh of relief from M&A advisers.

The provisions, contained in the current Pensions Bill, would have granted regulators wide powers to force shareholders, investors and related companies to make up fund shortfalls – a major issue in takeovers since more than 90% of final salary schemes are reckoned to be in deficit.

The British Venture Capital Association, arguing that the legislation would have particularly hit private equity, lobbied hard, fearing that portfolios of unrelated companies could be forced to subsidise other schemes.

As one senior pensions lawyer put it: "I talk to our corporate team all the time and you hear the same thing: deals are frozen until this gets sorted out."

But even if the Government ditches the proposals entirely, M&A lawyers are increasingly having to get used to the idea that pensions can be a deal breaker.

This is particularly true for private equity, with trustees feeling understandably queasy about sponsor companies being acquired in highly leveraged deals.

This concern is magnified in the retail sector – whose cash-generating potential and poor stock valuations have attracted much of the buy-out activity of recent years. But as in the case of the £215m hole in WH Smith's pension fund – a shortfall that may stall Permira's bid – such businesses bring liabilities to spare.

And the current wrangling over the gaping hole in Marks & Spencer's fund is a reminder that after 10 years of post-Maxwell legislation, accounting reform, European rulings and sullen stock valuations, such concerns are by no means limited to buy-outs.

Pensions had already gone to the top of the priority list in due diligence and it is a mark of how far things have come when there is serious talk of regulators scrutinising M&A deals for pension issues in the same way that competition clearance is granted.

Of course, some of these problems will vanish when the market turns, but with vendors looking for increasingly sophisticated strategies to manage their liabilities, the days of pensions as corporate support are surely over.

Macfarlanes and Alchemy

Macfarlanes' role advising Alchemy on the sale of Four Seasons Health Care last week was yet another example of how valuable the client has become to the firm.

Since Macfarlanes secured the exclusive arrangement it has with Alchemy in 1999 ahead of Nabarro Nathanson and Clifford Chance, the firm has enjoyed consistent top end instructions from one of the more active UK private equity players.

Alchemy accounted for two of the five biggest deals Macfarlanes has taken a senior role on over the past two years and the house has instructed its adviser on no less than 17 sizeable transactions over the same period.

Not only have the deals Alchemy has done been regular and often complex instructions, they have also been of sufficiently high profile to portray the firm as Alchemy's in-house counsel.

While Macfarlanes argues its client base is diverse enough to refute the claim, the transactions it has done for other private equity clients over the past two years, such as 3i and Candover, are not notable for their size.

The danger is that what is probably London's most admired mid-market corporate team could become over reliant on the Alchemy brand.

There are worse problems to have, of course, but a mystery remains over why the firm whose practice is so noted for its work ethic and all round quality control is not getting headline instructions from a wider source of clients.