Don’t be blindsided by surprise liabilities
Merging or purchasing another company is like a marriage: the two become one. Like a marriage, there are sometimes hidden expenses and with a business, there are risks, often not revealed until after the merger. Often times, you discover that there’s an ugly past that wasn’t talked about while you were being wooed. There’s a host of questions you should have answered before signing on the dotted line, such as:
- Were prior liabilities assumed in the transaction or was it an “asset purchase” only?
- Who is the Surviving Entity?
- Did the “assumed” entity cease operations?
- How does the assumed entity’s claims experience impact my business?
- Were the Representations and Warranties financially “secured”?
- Are the seller’s current insurance policies adequate to cover their main risks?
- Does the seller have any potential liabilities that are NOT covered by their insurance?
- Are there any red flags when you review third-party contracts, guarantees, indemnities and/or agreements?
- Is it possible that adding or moving any operations to unfamiliar locations could generate any claims?
We can cover the risk for some of these questions with Transactional Insurance, which can be used to offer solutions that will simplify the closing of Mergers & Acquisitions, as well as innovative solutions for restructuring and workouts. Examples follow of only a few of the different types and insurance and their purpose.
M&A Tax Liability Insurance is designed to transfer a challenged tax liability from a company’s books to an insurance company, thereby covering financial loss from a successful tax authority challenge. For M&A transactions, policies are available for either before or post-transaction.
M&A Warranty and Indemnity Insurance / Representations & Warranties Insurance is intended to protect for certain losses that can be incurred in the sale of a business if the buyers or sellers made any misrepresentations about the transaction.
M&A Contingent Risk Insurance / Contingent Liability Insurance covers a variety of conditional or “contingent” legal risks that may arise during due diligence. One example of use could be for employment disputes.
Whether you’re a buyer or the seller, there are lots of ways insurance can protect you from some of the risks involved. A highly experienced professional will be happy to discuss all the options available.
Insurance Appraisal and Business Valuations
We’re there to make sure you’re purchasing an asset and not a history of outstanding liabilities. Worth may be a matter of perception, but value shouldn’t be. Corporate Insurance Advisors provide insurance appraisals that ensure you receive an equitable and realistic claim settlement. A professional insurance appraisal can be one of the most effective ways to settle a dispute. Equally valuable are our business valuation services. From setting a viable selling price to establishing realistic insurance coverage amounts, Corporate Insurance Advisors has the experience, partnerships and knowledge that is key to delivering accurate and dependable insurance appraisals and business valuations.
Corporate Insurance Advisors can provide protection that gives you a host of advantages and benefits during the merger and acquisition process. With the right plan, we can:
- Give you more time to spot existing problems
- Eliminate any worries of not being able to collect on a seller’s promised indemnification
- Actually speed up the business sale by covering liabilities of future representations and warranties claims.
- Help maintain a solid relationship with the seller, which can prove to be highly beneficial.
What our clients are saying
"It is our pleasure to recommend our agent and his firm, Corporate Insurance Advisors "CIA", as a potential Insurance Broker for your firm. We believe you will find him and CIA to be well qualified to assist with any insurance needs your firm may have."
"As the years have come and gone, CIA has always found an insurance company who would treat us fairly upon renewal. We know when we have a claim, a contract to be reviewed, coverage questions or any other concern, Corporate Insurance Advisors is there for any issues that arises. We ...
"I have had the pleasure of working with our advisor and CIA for the past several years. I had a great relationship with my agent at the time, and was initially resistant to talking to another broker, but she came very highly recommended. She explained that there were programs and ...
"My agent is extremely competent, knowledgeable, available, and engaged. While negotiating insurance terms and coverage for a project, she worked with my staff and her underwriters for dozens of hours over a period of four months, offering alternatives and options that worked for both us and our client. My agent ...
"Our agent's research and determination found us policies that saved a tremendous amount of money while making sure revenue went up. She is an amazing advocate, and we are so appreciative of her efforts on our behalf."
There is absolutely no agency which we have found that is better equipped to handle all of our insurance needs. Our needs range from commercial policies to health insurance and CIA has consistently surpassed our expectations. We can say, with utmost confidence, that our account is in the best hands ...