CFC Underwriting is hoping it’s made a breakthrough in the M&A market with a new proposition.
The MGA has boosted its transaction liability line-up of products with a new solution it hopes will help speed up and simplify the process for private equity firms when they are pursuing a portfolio of add-on acquisitions.
“While the timing, size and investment strategy behind each portfolio varies, every business looking to purchase add-ons to their platform companies wants a streamlined, efficient process,” said transaction liability practice leader Angus Marshall. “Having to negotiate a new transaction liability policy for each acquisition adds unnecessary time, not to mention cost. We’ve built a solution that gives buyers and sellers the certainty of recourse they require behind each transaction, but without the hassle.”
According to the firm, smaller transactions are often going uninsured – so its solution expands the market of insurable risks and can be structured to work even with small add-on acquisitions.
The idea, according to Grant Hollis, the firm’s transaction liability team leader, is to agree a master policy wording at the time of the primary platform acquisition with add on endorsement when each subsequent acquisition completes. With an aggregate policy limit agreed upfront, or individual policy limits for each deal, there is real flexibility.
“Our solution can be structured in a number of ways but offers the potential for one limit, one premium, one fee and one aggregate retention across an entire portfolio of companies,” he said. “It negates the need for individual policy negotiations delivering a massively more efficient process for smaller deals with the added benefit for the policyholder that additional acquisitions are covered by a partner who they already have a relationship with and trust.”