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Private Equity Mergers & Acquisitions

Given all of the complexities associated with mergers and acquisitions (M&A), it is critical to have experienced risk management and consulting advisors by your side. We can identify, address, and advise on risk and insurance issues affecting negotiations and transaction success.
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In an increasingly competitive business world, organizations are driven to look for every growth opportunity they can possibly pursue. Depending on their place within their industry ecosystem, acquiring other companies or merging with actual or potential competitors might be a worthwhile investment. Both courses of action have major potential for revenue generation — and in some cases are essential for survival.

Mergers and acquisitions are also among the riskiest and most complex business transactions. In fact, many of them fail, either because deals are never closed or businesses encounter insurmountable difficulties after merging.

But your M&A doesn't have to suffer the same fate: Marsh's specialists have more than 20 years' experience counseling buyers and sellers alike throughout all stages of cross-border and domestic transactions. We'll help you craft a custom risk management strategy, strengthened by a robust M&A insurance program and comprehensive consultation from our global specialists.

250+

dedicated M&A service colleagues around the world

25+

years of industry-leading experience

4,000+

transactions completed annually

FAQ's

The global risk landscape is changing for mergers and acquisitions. Challenges that dealmakers face include:

  • Operational risks: Trade errors, compliance issues, or failure to properly vet various parties can lead to financial losses.
  • Environmental, social, and governance (ESG) factors: In response to increased pressure from investors, dealmakers need to evaluate their ESG efforts to be an appealing deal partner.
  • Talent management: Managing workplace cultural differences and ensuring a workforce can adapt to new technology plays a role in an acquisition’s success.
  • Cybersecurity risks: As firms implement new technologies to provide a more connected customer experience, businesses are facing increasing cyber threats.
  • Policy changes: It’s difficult to keep up with regulatory shifts, such as changing tax insurance requirements, and failure to comply can result in hefty penalties.

To overcome these challenges, you should consider engaging a broker who can optimize risk mitigation measures and help you navigate this evolving risk landscape.

Any M&A transaction faces a range of exposures or complications with financial implications. A lack of due diligence and sophisticated risk and insurance planning can lead to surprises or incorrect valuations. Potential risks can include:

  • Not ensuring insurance increases are factored into the insurance budget.
  • Inadequate or no provisions for self-funded losses in the opening balance sheet.
  • Gaps in the seller’s insurance program or coverage provisions.
  • Ambiguities in the sale and purchase agreement.

Being aware of, quantifying, and making provisions for these issues can lead to cost efficiencies, an improved ability to negotiate on price, a smoother and faster integration, an improved sale and purchase agreement, and a reduced exposure to unexpected costs.

A sophisticated broker with a depth of experience and the ability to conduct in-depth due diligence, such as Marsh, can identify these potential exposures and turn obstacles into opportunities to support a successful deal.

Simply put, any organization entering a merger or preparing to acquire one or more companies needs the safety net that insurance can provide. The sheer number of ways in which transactions like these can (and do) go wrong makes a coverage and risk management plan all but mandatory.

That being said, going into the M&A process with this acknowledged doesn't mean you can proceed as if success is guaranteed. It is vital that you work with risk practitioners who have helped others achieve the best outcomes for their M&As.

M&A and transactional risk insurance, coupled with a comprehensive risk management solution, are vital components to help achieve a successful deal outcome. Risk and insurance due diligence services are imperative to address areas of exposure or hidden liabilities.

Given the complexities of tax legislation, globally and locally, products that cover tax liabilities are particularly beneficial to de-risk a transaction. Related solutions to achieve a successful deal outcome include representations and warranties coverage and contingent tax liability insurance.

 

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Eva Orban

Eva Csomor

Vice President