Mergers and Acquisitions within the Mining Industry

In mining-industry M&A transactions, both buyers and sellers are at risk of not creating adequate value in acquisition or disposal.

Fueled by strong commodity prices and repaired balance sheets, mergers and acquisition (M&As) in the global mining sector has accelerated. It takes an expert to recognize and consider the variables inherent in larger transactions, bolt-on acquisitions, and cross-border deals in emerging markets.

In mining-industry M&A transactions, both buyers and sellers are at risk of not creating adequate value in acquisition or disposal. The main issues behind lack of success are:

For buyers:

  • Overpayment.
  • Post-deal completion issues such as uninsured legacy liabilities.
  • Failure to integrate the target smoothly and efficiently.

For sellers:

  • Purchase price disputes.
  • Post-deal completion issues such as warranty and indemnity claims.

Understanding the cause and impact of these issues can mean:

  • A more efficient price, avoiding overpayment or post-close surprises.
  • Improved sale and purchase agreements, avoiding ambiguities in the purchase and sale agreement.
  • Smoother, faster integration, avoiding delays.
  • More efficient corporate governance.

What We Offer

Risk and insurance due diligence reduces the level of uncertainty and reduces the risk of surprises after a deal closes. Marsh’s Private Equity and M&A practice (PEMA) works to provide risk and insurance advice that complements traditional financial, legal, and commercial due diligence. Our advice enables you to better understand the risks in an M&A transaction, and factor those risks into negotiations and pricing. Among the benefits we provide are:

For buyers:

  • Identify risk and insurance issues that affect financial negotiations, such as large retentions, self-insurance, etc.
  • Evaluate insurance programs to determine the quality and extent of remaining insurance limits, as well as the solvency of historic insurers.
  • Identify and resolve issues in the sale and purchase agreement.

For sellers:

  • Identify potential issues that may influence the deal.
  • Identify carve-out costs that may be used by the buyer to negotiate price.
  • Develop pro-forma insurance cost projections.
  • Determine the adequacy of reserves in cases of self-insurance.
  • Place a range of transactional risk solutions, to provide cover against deal obstacles that can lead to purchase price disputes.