One area of complexity in a buy-side M&A transaction is commercial insurance. Given all the potential liabilities, hidden risks, industry-specific needs and coverage gaps, knowing what to look for during due diligence is critical to maximizing post-deal value.
On this episode, Brian Stovsky, senior vice president and practice leader for the Oswald Companies and Unison Risk Advisors Mergers & Acquisitions Practice, and Joe Curtis, vice president and director of benefits for Michigan at Oswald Companies, talk about buyer pre-and post-close M&A due diligence considerations of commercial insurance for risk management.
Here's an excerpt:
“What is deal threatening in terms of compliance? Are they out of compliance with the Affordable Care Act? The IRS? The Department of Labor? ERISA? Things like that can kill a deal. Do they have an outstanding pension liability, of an owner that's not continuing with the business, that's underfunded? That's a huge time bomb for us that could threaten the deal. Whether their ERISA documents are in place, that's something that we could fix post closing. For commercial insurance, is there an impending cyber liability that is going to really impact earnings post-closing? Is there a litigation that's ongoing that's going to impact earnings post-closing? Those are deal-threatening issues. Whether the limits or a policy could be enhanced — cost-neutral considerations that could be done following close — we'll break those things out, whether it's a platform or an add on.” - Brian Stovsky, Oswald Companies
You can catch the full conversation on the podcast.
