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 | PitchBook Newsletter | | Private Equity Edition |
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| Powered by the PitchBook Platform. Learn more» | | 570,983 Deals | 35,173 Funds | 22,787 Limited Partners | 29,269 Advisors | |
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FRIDAY, JULY 15, 2016  | |
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Using insurance capital to enhance deal terms & allocate risk | PitchBook Dealmakers Column | The M&A landscape continues to transform rapidly in the use of transactional risk insurance products.
Representations & Warranties Insurance (“R&W Insurance”) has gained widespread acceptance among sellers seeking a low-indemnity (or even no-indemnity) structure. R&W Insurance is frequently used by buyers seeking to reduce their purchase price (or otherwise enhance their bid) by reducing the escrow and indemnity ceiling. The R&W Insurance policy typically has a policy period that far exceeds the typical time frame for an escrow and may exceed the time period for the survival of representations for purposes of indemnity. Some policies have detailed claim provisions that assure prompt evaluation and fair resolution of claims. These are powerful incentives to use R&W Insurance.
Essentially, R&W Insurance requires the insurance underwriter to satisfy itself that representations are not inherently too ambiguous, overbroad, or complex to be properly diligenced, that due diligence has taken place, and that heightened risks have been identified and either excluded or thought to be within the retention, etc.
Products such as tax insurance, litigation buyout and contingent liability insurance begin with the premise that a heightened risk exists. The insurance underwriter spearheads a focused diligence on transferring such risk via a policy tailored precisely for such risk. These products complement R&W Insurance. The suite of transactional risk insurance products, in their entirety, allows insurance capital to enhance M&A deal terms and allocate all risk—whether known or unknown, heightened or banal.
These products, however, still sit in the shadows of R&W Insurance as many advisors remain unaware that they exist; this article briefly introduces tax, specific litigation and other contingent liability insurance. Click here to read the full article.
Contact:
David De Berry, Esq., CEO, Concord Specialty Risk
+1 (212) 784-5678
daviddeberry@concordspecialtyrisk.com
This article represents the views of the author only and does not necessarily represent the views of PitchBook. |
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To honor the 10th anniversary of Twitter's public launch, a bluebird-centric edition of read recommendations:
The 100 funniest jokes in the history of Twitter. [GQ]
Recounting Twitter’s recent C-suite drama, and examining the company’s big bet on CEO Jack Dorsey. [Vanity Fair]
The evolution of the Twitter profile. [Time]
Tech content turns quaint with crazy quickness. This 2012 Beginner’s Guide to Twitter feels like an artifact from the 19th century. [Mashable]
Making the case that politicians should be banned from Twitter. [Maclean's]
The many things data from Twitter has taught us, including the patterns of people’s daily movement and the fact that Hawaii is the happiest state in the U.S. [The Conversation] |
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2006 Vintage U.S. Buyout Funds with B2B Investments | | Median IRR: | 10.90% | | Top Quartile IRR Hurdle Rate: | 14.99% | | Median TVPI: | 1.6x | | Average Amount Distributed: | $2.1 billion |
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Permira, Thoma Bravo, Vista conducting due diligence on McAfee | Permira, Thoma Bravo and Vista Equity Partners are among the private equity firms conducting due diligence on Intel cybersecurity provider McAfee, according to Bloomberg, as Intel considers its options for the business. Intel purchased McAfee in 2010 for $7.7 billion. | Database Software Santa Clara, CA |
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MBK aims to take Accordia Golf private Rizvi-backed RealD acquires Tessive | Rizvi Traverse's portfolio company RealD has acquired Tessive, a developer of motion image processing technology. The company’s proprietary software will allow RealD to launch TrueMotion, a production tool with the capacity to correct imperfections in motion capture. | Multimedia Software Albuquerque, NM | |
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Webster Capital goes to Margaritaville | Webster Capital has partnered with Margaritaville to purchase a stake in the company’s apparel and consumer products division, Lifestyle Brands, which designs and supplies apparel, swimwear, accessories and recreational products for the Margaritaville brand. | Accessories Los Angeles, CA | | |
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Marlin closes first Euro fund at €325M | Marlin Equity Partners has announced the close of Marlin Heritage Europe with €325 million in total capital commitments. The firm had set a €200 million goal for the fund, which will target investments in the lower middle market. | |
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CVC hires new head of European healthcare | CVC Capital Partners has hired Cathrin Petty as a partner and head of European healthcare operations. She joins CVC from JP Morgan, where she was head of healthcare in EMEA. Petty will be based in CVC's London office. | PE/Buyout Luxembourg City, Luxembourg |
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Creador nearing $450M target on Fund III | Creador has so far raised about $323 million for its third fund, according to an SEC filing. The firm, which invests primarily in South and Southeast Asia, closed its predecessor fund in 2014. | Kuala Lumpur, Malaysia Buyout |
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BMO provides debt for Rainbow deal |
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