Here's how we take post-closing risk out of mergers and acquisitions. From elimination of escrow to capping environmental liabilities, Willis provides due diligence and transactional risk solutions to help you get the deal done.
AGENDAPRESENTATION TO ADDRESS: Willis M&A Value Proposition and Business Model Insurance Due Diligence Mission and Process Filling the Value Gap in Insurance, Risk Management & Employee Benefits Due Diligence Simplify how risk management due diligence dove tails with accounting and legal diligence Employee Benefits Strategic Planning, Transition and Implementation Simplify and define those risk transfer insurance products that have been borne out of M&A activity and transactional exposure to loss Case studies providing examples of how risk management and insurance diligence has led to better returns and protected against financial disaster
WILLIS M&A VALUE PROPOSITION Experience of M&A Team – Understand how risk impacts returns across all industries regardless of size. – Expertise gained through over 5,000 transactions of experience enables us to anticipate and move quickly. Definition of Due Diligence – Go far beyond the “commodity” of insurance products. – Perform review of financial, legal, and risk management exposures, quantify those and provide opportunities to control costs both on and off balance sheet. Team Structure within Global Organization – Global Resources delivered locally (industry, product line, geographic) added to diligence team to best quantify and address risk across all areas. – Marketing function included as part of due diligence deliverable positioning most knowledgeable person to negotiate the most auspicious price. Fully integrated production and execution resources providing single point of contact delivering resources where and when needed.
PRE-CLOSING DUE DILIGENCEMISSIONADVISOR – Raise potential operating risk issues, financial risk issues and business risksissues respective to operations and human capital that will impact or potentially prohibitthe successful implementation of the post closing business model.PARTNER – Work with finance, legal, and operational teams throughout deal processfrom pre-LOI through purchase agreement and with Portfolio management teams asrequired in order that the target enterprise is properly valued.PRICING – Estimate the impact that cost has on the income statement and cash flowstatement as well as evaluate the impact of liability both on and off the balance sheet andultimately make sure these impacts are contemplated in the purchase price.INTEGRATION – Use pre-deal research to develop a blue print for integration includingbenefits and needed employee and executive related interventions. Execute insuranceprograms commensurate with current (Buyer’s) risk management strategy.
DUE DILIGENCE PROCESS Pre-closing Financial/ The Deal Research Legal/Risk/ Benefits Go – No Go Client Advocate Integration into Stewardship Re-Engineering/ Buyer’s Program & Reporting Transition Planning
PROPERTY & CASUALTYPRE-CLOSING DUE DILIGENCE DEFINED Financial – Accrual Methodology – Collateral Obligations – Current Cost vs. Proforma – Funding Obligations – Predictability Pre-Closing Due Diligence Legal Risk Management – Purchase/Sale Agreement – Limit Adequacy – Historical – Insurer Solvency Accuistiors/Divestures – Analysis of Losses – Credit Agreements – Historical Aggregate – Run-off Liabilities Breaches
EMPLOYEE BENEFITS PRE-CLOSINGDUE DILIGENCE HISTORICAL Quantify assumed liabilities Match available coverage to DETERMINE ADEQUACY forecasted liability/headcount Ultimate loss costs OF RESERVES/ Adequacy of historical Collateral requirements ACCRUALS insurance Evaluate benefit funding Solvency/availability of Insurers CURRENT/POST-CLOSE QUANTIFY ASSESS FORECAST cost of risk/exposure adequacy/appropriateness pro-forma cost of risk & impact on cash flow & P/L of current insurance/programs and expense reduction alternatives
STRATEGIC PLANNING Willis M&A EB Multi-Disciplined Transaction Practice Tax & Health & RetirementERISA/Compliance Welfare/Wellness Compensation Plan Design International Communications HR Excellence
EMPLOYEE BENEFIT SUITE OFSERVICES “One Stop Benefit Shop” Cost Containment Human Resources Media Compliance Willis Rewards► Data mining & analytics ► HR strategy ► Multi-media: ► Federal compliance ► Turnkey wellness► H&W actuarial ► Total rewards review ► Paper ► Client support ► Worksite reviews► Retirement ► HR audits ► Web ► Seminars/web casts ► Diet content► Financial reporting ► Best practices ► Video ► Compliance self-service ► Fitness content► Prescription drug ► Handbooks ► Text ► Publications ► Health coaching ► Policy and procedures► CDHC feasibility ► Open enrollment ► Government filing ► Reward tracking ► Trainingdevelopment► Plan design modeling ► New hire orientation ► Reward delivery ► Web based tools► Contribution modeling ► Newsletters► Migration studies ► Wellness roll out ► CDHC deployment
TRANSACTIONAL SOLUTIONS REPRESENTATIONS & CONTINGENT LIABILITY WARRANTIES INSURANCE INSURANCE – Seller Side Policy. – Successor Liability Insurance – Buyer Side Policy. – Legislative Contingency – Can be structured in conjunction – Specific Peril Contingency with a bid to offer more preferred deal terms. – Assists in facility deal process where there might otherwise me an impasse. – Waiver subrogation against seller (except fraud) so that seller parties can provide more complete reps. LITIGATION BUYOUT COVERAGE TAX INSURANCE – Loss Portfolio Transfer – Insurance Proceeds avoid – Contingent Exposure Coverage negative cashflow – Can be structured to respond excess – Disclosure issues backstopped over existing insurance – Respond to tax positions – Can provide a catastrophic cap over a – Provides a solution in a transaction calculated damage analysis where a specific tax position might be in – Can be fully transferred to a 3rd party question
DUE DILIGENCE ISSUES/SOLUTIONS Assumed liabilities within historical retentions Specific assumed liability Successor environmental liability Silicosis liability Product liability Liability buyout Exposure Classification Cost Mitigation Certainty of Cost and Certainty of Coverage