Private Equity professionals undertake the inherently difficult task of growing other people’s wealth by buying and selling businesses. One critical “make or break” aspect of this investment strategy is effectively evaluating and insuring the risks faced by these portfolio companies. Private Equity professionals cannot afford to fail in this endeavor. Improperly insured, underinsured or uninsured losses may adversely impact, or even destroy a portfolio company’s profitability and returns.
Owens Group has significant experience helping Private Equity clients with all aspects of the merger and acquisition (M&A) process: from due diligence through a final sale. Lead by an experienced, former Private Equity attorney, Owens Group is uniquely qualified to help clients understand and evaluate risks; and to strategically manage those risks. Owens Group’s findings and insight removes a great deal of uncertainty, positively impacting transactions made by Private Equity firms.
In addition, Owens Group can help a Private Equity firm craft insurance solutions to protect them and their returns. Owens Group uses insurance in innovative ways to create value and bolster returns for our Private Equity clients.
Policies and services that regularly come into play during the course of a Private Equity and M&A transactions are:
Due to the nature of their organizational structure and operations, Private Equity, Venture Capital, Hedge Funds and other assets management firms face a unique set of risks that cross the traditional boundary between management and professional liability. In response to this situation, a select group of insurers have developed specialized insurance products that combine professional and management liability into a single, seamless policy. Furthermore, these policies can be customized to include coverages that are vital to Fund Managers, such as Employment Practices and Fiduciary Liability. Read More
Professionals who are regularly engaged in the business of acquiring companies recognize that acquisitions present both towering opportunities and significant risks. For this reason, potential mergers & acquisitions are regularly subjected to a thorough due diligence process. This may include reviews of management, operations, structures and insurance coverage. Owens Group regularly performs due diligence reviews, and evaluations of a potential investment’s insurance programs on behalf of Private Equity firms and other acquisition groups. Read More.
The allocation of liabilities and risks between the parties in a merger or acquisition is one of the most fundamental and difficult aspects of any transaction. Representations and Warranties Liability insurance protects the insured against unintentional or unknown breaches of representations and warranties in the purchase agreement and supplements the indemnification provided by the sellers. It can also free up any cash that previously languished in escrow.
Owens Group has expertise in securing both Buy-Side and Sell-Side policies. We complete every transaction with a negotiated policy specific to the purchase agreement so as to avoid any coverage ambiguity. Read More.
Specific Contingency Insurance (SCI) provides coverage for known and specific issues that arise between the buyer and the seller in a merger or acquisition. The purchase of an SCI policy can indemnify the buyer for the financial impact of a specific contingency, thereby converting a contingent liability into a certain, and often deductible, expense — and help to facilitate the transaction. Owens Group can lend their expertise in crafting and securing an SCI policy that is ideal for a particular merger or acquisition.
Tax Indemnification insurance is designed to reduce uncertainty relating to tax issues involved in merger & acquisitions. A Tax Indemnification policy ensures that a specific tax issue, if challenged by a relevant authority, will be interpreted as intended by the parties engaged in the transaction. Read More.
Sometimes when the selling company in a transaction is involved in an ongoing litigation issue, a financial resolution of the issue between the buyer and seller is simply not enough. The buyer wants not only to be made whole in the event of an adverse ruling, but also wants a third party to take over the entire litigation process. This is where Litigation Buyout insurance can help. When an organization is covered by a Litigation Buyout policy, the insurance company steps in and takes over the defense, along with any financial impact associated with it. Read More.
Environmental or related issues can threaten the feasibility of mergers & acquisitions, or make them less attractive to a buyer. Several insurance solutions exist to help address both known and unknown issues in these types of transactions, and can help facilitate a successful outcome. Read More.
Personal Directorship Liability (PDL) is a personal liability policy for independent directors that responds when certain losses are not indemnified by their companies, or not paid by other Directors’ & Officers’ Liability insurance. Read More.
Private Equity professionals are regularly involved in evaluating and designing insurance programs for portfolio companies. Owens Group provides expertise in creating insurance programs for a broad range of industries, and can identify the best fit for your companies — for both focused and diverse portfolios.
The nature of the Private Equity industry means that PE professionals are regularly engaged in evaluating and designing insurance programs for a variety of portfolio companies; but that doesn’t mean that they need to reinvent the wheel with each transaction. Insurance programs can be designed to allow a fund to leverage the collective buying power of its portfolio to benefit the company, the PE firms and its limited partners. The resulting programs can eliminate the potential for human error, and often produce improved coverage terms, reduced premiums, and a more streamlined process.
Examples of policies where this may be applied, includes:
Owens Group provides expertise in tailoring policies for a broad range of industries, and can identify the best fit for your companies — for both focused and diverse portfolios.