Due Diligence

The Private Equity and M&A team at Marsh provides insurance due diligence services to clients buying or selling all or part of another company or seeking debt finance.

We provide insurance due diligence services to clients buying or selling all or part of another company or seeking debt finance.

Our clients are typically funds (private equity, infrastructure, and real estate funds), family offices, corporates, and lenders.

Our approach to insurance due diligence is tailored depending upon whether the transaction is an acquisition, disposal, primary development, or refinancing.

Insurance Due Diligence

Buyers (Acquisitions)

For buyers, we provide insurance advice regarding the target business in the context of the acquisition. Our findings are delivered in a report, which can be relied upon by the buyer. Using a structured and systematic approach (which involves a review of key transaction documents), we:

  •   Pinpoint key insurable risk exposures.
  •   Identify the target’s insurance purchasing strategy.
  •   Establish the total cost of insurance.
  •   Assess the target’s loss history.

We use this information to:

  •   Identify under-insured or un-insured risks.
  •   Comment on any foreseeable change in insurance cost.
  •   Recommend insurance-related provisions for the sale agreement.
  •   Provide a roadmap of key insurance actions, pre and post completion.

For corporate clients, we also set out how the target could be integrated into the corporate client’s existing insurance arrangements (and what cost impact this could have).

The key benefits of insurance due diligence include:

  •   Helping the buyer decide whether to proceed.
  •   Assisting with validation of purchase price.
  •   Optimising insurance protection in the sale agreement.
  •   Mitigating insurance-related risks.

Sellers (Divestments)

For sellers, we provide vendor assistance and vendor due diligence services.

Vendor assistance encompasses a range of services and can include: 

  •   Providing a value issues report summarising key issues.
  •   Advising and assisting with preparation of the project data room.
  •   Participating in Q&A sessions with bidders.
  •   Reviewing insurance provisions in the sale agreement.
  •   Reviewing the transition services agreement.

The key benefits of vendor assistance include:

  •   The seller has time to address any downside issues.
  •   Management time compiling information and dealing with multiple questions from bidders is significantly reduced.
  •   Unforeseen liabilities staying with the seller instead of transferring to the buyer are minimised.
  •   Related separation costs on the seller’s retained business are mitigated.

We can also provide a vendor due diligence report which, unlike a value issues report, can be shared with all bidders. 

The key benefits of a vendor due diligence report are: 

  •   Bidders have good quality and robust information, minimising the potential for last minute issues to arise.
  •   It adds credibility to the facts and numbers the seller presents to bidders.
  •   The report can be relied upon by the ultimate buyer.

Lenders 

For lenders we provide insurance due diligence services that address lenders’ interests and confirm that borrowers have robust and bankable insurance solutions.

In our capacity as a Lenders' Insurance Advisor (LIA) we provide services to all types of debt providers across every industry sector for projects located throughout the world, including;

  •   Construction/primary developments.
  •   Growth and expansion projects.
  •   Concession-based projects including public private partnerships.
  •   Refinancing and secondary market transactions.

Using a structured and tailored approach we utilise our experience to:

  •   Identify and assess the risks which may be a threat to the transaction and debt servicing.
  •   Stress test the proposed insurance against the project’s specific risk profile.
  •   Advise on the allocation of risk and insurance responsibilities in the various contracts.
  •   Define the borrower’s minimum insurance obligations and confirm their adherence.
  •   Monitor the borrower’s ongoing compliance with the insurance requirements of the finance documents.

Our LIA expertise, tried and tested methodology, and broad and deep sector experience are key differentiators that benefit lenders and borrowers alike to structure debt financings professionally, efficiently, and securely, regardless of the transaction complexity, geographic location, or language.

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”