Mergers and Acquisitions Insurance

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The three key areas for consideration if your company is thinking about a merger or acquisition in our opinion would be based on the...

Purchaser
Seller
The joint parties merging

Mergers and acquisitions deals are successful when both buyers and sellers or companies merging, come out of the finance negotiations having taken into account the price paid, value to shareholders, benefits and potential risks.

Mergers & Acquisitions – The Purchaser

They need to consider the following areas carefully before an acquisition;

Obtaining a independent actuarial and due diligence exercise.
Capital requirements to purchase.
Risk and development potentials.
Structured business development plan upon acquisition.
Redundancies and employment requirements, liabilities and costs.
Special consideration should be given to the ‘deal price’, what current business and orders the company has or will get, natural profitability and projected results.
Be well prepared at meeting with the seller, assess the possible points to be discussed, and have pre-counter replies to the areas that could be brought up in the negotiations.
Guidance from your advisers, and making sure that you appoint the right companies to represent your interests - solicitors, banks, brokers, accountants etc. It is important that you also get on with those companies’ representatives as personalities can often make or break deals!!
Deals where acquisitions have failed could have been pretty much down to that ‘Human Thing’. If you make or all some (or all) of the acquired company’s staff redundant you could be tearing out its very heart, and at worst those key ex-employees may set up as competition taking those loyal clients away from you. So integration and handling of human resources should be a major factor in the purchasers deal.
Clearly Directors & Officers Insurance and Mergers & Acquisitions covers need to be considered.

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Mergers & Acquisitions – The Seller

When selling your business you need to consider;

Your advisers, brokers, accountants and solicitors - these may not be your current advisers as sometimes it is better to obtain specific experts who may be more knowledgeable in mergers and acquisitions.
Clearly you need to obtain the maximum sale price at the lowest costs.
Consider the questions and information needed by the purchaser, and prepare responses and paper work accordingly.
How your employees are considered, don’t forget they could be an important asset to the business and the purchasers, so a well prepared exit concept should be thought out prior to the sale.
It maybe a very important factor to keep the possible sale of your business a very secretive and discrete affair when considering offers or purchasers.
You may need to consider the appraisal of the business where only part or blocks of the company are sold, as a better option than selling the whole structure.
Naturally the due diligence procedure, help with negotiations over price and contractual terms.
Clearly Directors & Officers Insurance and Mergers & Acquisition covers need to be considered.

Mergers & Acquisitions – The Merge

When two companies (or more) join together both (all) sides need to look at the advantage to their company, what benefits will they obtain. Once again the important areas and negotiations will require due diligence of key directors and officers and their advisers at the highest level, consideration and best outcomes for each side will be paramount in the negotiations. Remember that not all mergers are on equal bases, very often a larger company takes over a smaller operation. So it is very important that a good balance is found and all sides come out feeling a solution has been achieved.