Owens Group’s Executive Vice President, Joseph Ehrlich, was featured in a Buyouts Magazine article about market trends for Representations & Warranties Insurance:
NEED TO MEET: Joseph Ehrlich, executive vice president, Owens Group Insurance
22 July 2014 | By Steve Gelsi
As sponsors embark on more public-style merger terms in private transactions, where representations don’t survive closing and there is no indemnity, Joseph Ehrlich of insurance broker Owens Group has seen higher demand for products to eliminate the need for escrow payments.
Often grouped under the umbrella of Representations and Warranties Insurance, these policies aim to help sellers avoid tying up the typical escrow payment of 10 percent of the purchase price for years if a dispute arises.
“Any place where you may use an escrow to take care of some uncertainty in the transaction, you can often use an insurance product,” Ehrlich said in an interview.
The insurance also may help general partners more quickly share the benefits of a portfolio company sale with their limited partners, by not locking up capital for an escrow payment and instead letting it boost the return on an investment and in turn, lift the IRR performance of a fund.
“If you’re in a capital raising environment, the money saved for an escrow payment could be a world of difference between having an IRR that puts you in the top quartile and one that barely puts you in the second quartile,” Ehrlich said.
Go to the full article here.