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M&A Risks and Insurance Pitfalls to Avoid

Marsh’s Risk in Context podcast series helps listeners better understand key risks, build more effective insurance programs, and think creatively about risk.

In this episode of Risk in Context, James White, head of U.K. Transaction Advisory at Marsh, chats with Suzanne Jones and Scott Brady, both managing directors in Marsh’s M&A practice, to discuss the significant risks and potential insurance challenges that companies should prepare for ahead of a merger or acquisition. 

On the current state of the M&A market:

“Last year was an extraordinary year in terms of mergers and acquisitions. … [This year] we see rising interest rates, which are hampering financing markets. The macroeconomic scene, certainly North America, is more challenged as we look at inflation and other concerns. Global uncertainties [are] impacting valuations. We see … a slowing trend in terms of aggregate activity, yet the deal counts remain high.” — Brady

“In the U.K. and Continental Europe, deal activity is still really strong with absolutely no … signs of slowing. And, in fact, we’re seeing a significant number of sell-side processes just kicking off, which will probably come to market in Q4 or early 2023. … We see no signs on slowing at all.” — Jones

Insurance as part of the M&A process:

“The one thing we’re all trying to prevent is adverse surprises for an acquirer. Anything that might be uncovered and could have been risk-transfered could be a potential P&L hit down the line.” — Brady

“I have seen on recent deals … particularly … for distressed sellers, where they won’t have implemented the … risk improvements that perhaps you would normally expect from companies, so again, really important to look out for any outstanding risk improvements or risk requirements that are required by insurers because that will fall upon the buyer if they haven’t been implemented.” — Jones

On resolving deal issues early:

“Most times, risk and insurance are not going to be deal-breakers as long as you know about them ahead of time. Make sure that you get involved in the M&A process as soon as possible so that you can actually address any issues in either the purchase agreement, the price or the reserve adjustments.” — Jones

Suzanne Jones

Managing Director, Private Equity and M&A Practice, United Kingdom, at Marsh

Suzanne Jones is a managing director at Marsh and is responsible for delivering M&A advice and solutions to U.K. companies making acquisitions and divestments. She joined Marsh’s Private Equity and M&A team in 1997 and has been at the forefront of developing risk and insurance due diligence for the investment, private capital, and M&A community.

James White

Head of UK Transaction Advisory, United Kingdom, at Marsh

James White leads the Transaction Advisory team of Marsh’s Private Equity and M&A practice in the U.K. and Ireland. Based in the U.K., he is responsible for the provision of insurance and risk-related advice and due diligence services to private equity, infrastructure, and corporate investors in connection with acquisitions or divestments.

Scott Brady

Managing Director, Private Equity Mergers & Acquisitions, United States, at Marsh

Scott Brady is a managing director in Marsh’s Private Equity and M&A Services Group (PEMA). Based in New York City, Scott leads PEMA in the Eastern United States, and he leads the corporate mergers and acquisitions advisory business in North America.

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