In the M&A world each transaction is unique and the treatment of known and unknown liabilities may ultimately determine the level of economic success for both parties to the transaction. Identifying risk and removing it from the transaction via a third party is the primary value The Plexus Groupe brings to the table for our private equity and venture capital client base.
Dedicated Due Diligence
While The Plexus Groupe is one of many subject matter experts included on the deal team, we recognize that the risk identification and transfer role we provide is extraordinarily important. Due diligence, by definition, requires time, expertise, and persistence. It is not something that can be streamlined, canned, or subject to a boilerplate review. We will immerse ourselves in the target’s operations, contracts, historical insurance programs (past and current), and claim history.
After identifying potential liabilities, we will explore cost effective insurance or risk transfer options. Examples of transaction “speed bumps” we address include the following:
Commercial Insurance and Risk Management
- Identify and evaluate insurance liabilities and associated collateral requirements
- Evaluate risk transfer and retention cost, both current and post-closing
- Advise of the insurance implications in the purchase / sale agreement
- Review insurer company solvency, both current and historical
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- Develop solutions for latent and future environmental liabilities
- Evaluate the effect of carving out past liabilities
- Restructuring historical programs
- Review current and future insurance program compliance with debt security requirements
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Group Insurance Benefits
- Identify and quantify benefit claim liabilities
- Provide cash expense forecasts for financial modeling
- Negotiate asset transfer of retirement plan liabilities
- Advise of the insurance implications in the purchase / sale agreement
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- Design and implement efficient employee benefits programs
- Provide ongoing communications to support human resources staff and employees on the management philosophy and program utilization
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Post Transaction
Managing client relationships in the private equity space necessitates resolving problems and issues at the portfolio company level thus keeping the problem off the “desk” of the private equity or venture capital firm. Often times, the short term interest of the portfolio company and the long term interest of the private equity group are contradictory. Managing this dynamic requires a high degree of technical cost/benefit analysis and thorough, precise communication. This post close dynamic requires a flexible and custom approach similar to the pre-close due diligence process. Addressing both the sides of the transaction with the same service commitment to communication and innovation allows The Plexus Groupe to realize our ultimate objective which is to do everything we can to ensure that our clients realize maximum value at exit.
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