Our pre-acquisition due diligence specialists in our M&A insurance and risk management team will help you determine changes in cost and review risk management exposures to verify adequacy of insurance coverage, and provide certainty of cost and compliance in the earliest stages of your deal.
Key differentiators
Understanding investment and industry risk
- We have a dedicated team of risk management professionals that specializes in M&A, focused on serving corporate buyers and sellers and alternative asset management funds and their portfolio companies.
- Our global team has worked on thousands of transactions across industry sectors and geographic borders, participating in every deal phase, from target evaluation through post-deal implementation
Powerful analytics
- Our predictive models can evaluate loss potential from a deal and provide decision support to optimize risk management strategies.
- Our actuarially sound models go beyond bechmarking to evaluate your experience relative to your specific industry and geographical profile.
- We will provide you a holistic summary of portfolio exposure to natural catastrophe risks.
- We will help you Identify the risk drivers that expose an entity to significant adverse outcomes during a merger or acquisition.
Driving innovation
- Our unique Cyber Quantified analytical tool assists in understanding privacy breach and network outage risk associated with an acquisition. It gives insight into how often a company could experience an event and how costly those events could be.
- We have designed unique solutions to protect a private equity (PE) firm’s investment.
Insurance and risk management considerations for pre-acquisition due dilligence
Pricing
We can help you estimate the impact of findings on the income statement, cash flow and balance sheet, and recommend how to adjust the purchase price by:
- Identifying the current and projected costs for risk management
- Reviewing collateral and accrual obligations
- Discussing pricing predictably
Coverage
We can help you identify potential operational and human capital risk issues that will impact the successful implementation of the post-closing business model by:
- Evaluating current adequacy of coverage and appropriateness or risk management techniques
- Establishing areas of potential coverage improvement
- Analyzing losses and insurance related litigation matters
- Finding run-off and legacy liabilities
Create value
We will work with your due diligence and/or portfolio management teams to confirm the target’s cost of risk by:
- Helping structure the insurance clauses within the purchase and sale agreement
- Reviewing and analyzing outstanding and potential future liabilities
- Identifying the impact of insurance on any credit agreements
- Protecting the acquisition or investment via risk management products and procedures
Employee benefits considerations for pre-acquisition risk management
WTW identifies and addresses deal-impacting issues by reviewing plan costs, plan structure and compliance.
Financial analysis
We perform a detailed analysis so you can fully understand all of the cost elements and financial mechanics of the employee benefits program, including:
- Quantification of current and projected costs to the target
- Description of plan funding (fully insured, self-insured, participating contract, etc.)
- Review of IBNR liability and adequacy of the current reserve being held
- Calculate historical and potential future liabilities including run-out exposures and surplus/deficit amounts
Risk management
We assess all aspects of risk related employee benefits – financial, compliance, plan design, etc. Specifically, we:
- Conduct benchmarking and coverage gap assessment
- Identify adequacy of accruals and insurance limits
- Recommend processes to mitigate future risk
- Provide insight on legislation that could impact employee benefits
Compliance
We protect you from current and future compliance risk and liability, coordinating with your legal advisors to ensure each of the following is completed with recommendations to address any potential inherited liabilities:
- Review Employee Retirement Income Security Act, Affordable Care Act, Department of Labor and IRS compliance
- Evaluate plan documentation and employee communication
- Confirm completion/results non-discrimination testing
- Review 5500 and annual audits
Additional support
Our focus is to protect your interests and facilitate the transaction. To round out our diligence services we support deal closure via the following:
- Review purchase and sale agreement and disclosure schedules
- Review transition services agreement
- Provide recommendations for portability and contract reassignment or new plan set up
- Identify funding or accrual inadequacies that could impact reported earnings before interest, taxes, depreciation and amortization (EBITDA)
