M&A Practice Update: Benefits Administration and HR Business Process Outsourcing (BPO)

Feb 21, 2017 | by Aon

Aon recently announced the sale of our Benefits Administration and HR Business Process Outsourcing (BPO) platform to Blackstone.

Aon Tax Insurance Leader Weighs in on Tax Insurance Developments

Dec 12, 2016 | by Aon

Gary Blitz, who is the Senior Managing Director of the Aon Transaction Solutions Team/Practice Leader of the Tax Group discusses with Bloomberg BNA how tax insurance has progressed over the past few decades.

Technology M&A

Nov 22, 2016 | by Kyle Kalinich, SVP, Aon Strategic Advisors & Transaction Solutions

It is probably not an overstatement to say we are in a new industrial revolution. While the movement from steam power to electricity a century ago may have been plainer to see, cloud-based data and analytics are transforming our current economy.

Planning for M&A: How to Avoid Hidden Risks

Aug 12, 2016 | by Aon

Although M&A activity in the first half of 2016 is down compared to the record level of global M&A activity seen in 2015, deals are still making headlines. This year also saw more big deals fail than usual, though the announcement of Microsoft’s planned $26.2 billion acquisition of LinkedInin early June and Softbank’s $32 billion acquisition of ARM Holdings in July indicate that high-value M&A is still on the agenda. These deals were big enough to make Verizon’s late July acquisition of Yahoo! For $4.8 billion look almost small in comparison.

Cyber risk is no longer considered an emerging risk

Jul 15, 2016 | by Chris Thompson, Managing Director

Aon Strategic Advisors & Transaction Solutions (ASATS) provides comprehensive risk assessment and risk transfer solutions for our strategic and financial buyer clients in the area of Cyber Liability and Network Security. Cyber risk is no longer considered an emerging risk. Through the Aon sponsored 2015 Global Cyber Impact Report (by the Ponemon Institute), Cyber is one of the fastest growing risks for companies across the globe. The widespread advent of mobile technologies, cloud computing and the Internet of Things has sharply increased the threat of a Cyber-attack for all companies across all industries. As a result of this, the insurance marketplace for Cyber Liability is limiting its capacity and coverage, while raising premiums for certain industry classes including large retail, healthcare and financial institutions.

Aon Tax Equity Update

Jun 23, 2016 | by Aon

Listen to Aon Transaction Solutions Co-Practice Leader/Senior Managing Director, Gary Blitz, discuss the tax equity outlook for 2016 at the Novogradac Financing Renewable Energy Tax Credit Conference in San Francisco.

Blitz provides updates on the state of the market, the tax equity investor pool and investing plans for the balance of 2016.

Bridging the Gap: Using Insurance to Cover Risks in Transactions

Jun 8, 2016 | by ASATS team

On May 12th 2016 Transaction Advisors held their annual M&A Conference in San Francisco. Gaurav Sud, Managing Director on the ATS team sat on the panel, which took a look at the use of representation and warranties policies in deal structuring; where the current market draws the line on coverage and terms; and the challenges the client and underwriter will need to address in the deal structure. Click here to listen.

Assessing the tax equity investor response to possible subordination in an ABS deal. What are some possible motivators to sweeten the deal?

May 2, 2016 | by Gary P. Blitz

Click here to listen to our Co-Practice Leader and Head of Tax, Gary Blitz discuss structuring challenges in managing the competing interests of tax equity investors and ABS bond holders. (Conference: 4th Annual Sunshine Backed Bonds Conference -April 21st, 2016)

Aon Health and Benefits for Private Equity Firms

Apr 29, 2016 | by Robb DeGraw, Esq., Senior Vice President

Aon Strategic Advisors & Transaction Solutions has added new tools and resources to help our clients manage their health benefit plans. Using our Health & Benefit strategic Savings Calculator, we are able to review group insurance plans to identify areas for optimization. These include reviewing the pharmacy spend, comparing managed care discounts, evaluating plan designs, and leveraging our group purchasing arrangements. Based on our experience over the past year, we have been able to identify savings in the range of 5-15% of the total benefits spend.

Aon's Matthew Heinz on Reps and Warranties Insurance

Jan 15, 2016 | by ASATS team

Matthew Heinz of Aon Transaction Solutions, and panelist for the 2015 PLUS Conference session “Playing to Win: Strategic Use of Reps & Warranties Insurance”, spoke to PLUS Blog about what reps & warranties coverage is, how it works, and how he expects the market to grow.

Transaction Insurance as a M&A Strategic Tool

Oct 7, 2015 | by ASATS team

The use of insurance in M&A transactions is gaining popularity among deal professionals who are finding this tool increasingly useful to bridge the gap on one of the most fundamental deal issues in any M&A transaction: the potential post-closing erosion of value (either of the consideration received by the seller or the business acquired by the buyer). Some of the most popular types of transactional insurance policies available to buyers and sellers are representations and warranties ("R&W") insurance, tax indemnity insurance, and contingent liability insurance, with R&W insurance being the most common.

Private REITs: Facilitating a Cleaner Exit with Tax Insurance

May 7, 2015 | by Gary P. Blitz and Daniel Schoenberg

Nonpublic real estate investment trusts (REITs) have been a popular vehicle for investing in US real estate. When it is time to exit the investment, the seller faces a challenge to get the buyer -- who likely wants only the hard assets (the bricks and mortar) -- to buy the corporate entity and take on the entity's actual and contingent tax and other liabilities. The traditional solution resembled the sale of a private company with the attendant escrow-based indemnification obligations. It can be particularly onerous for private equity sellers to leave behind up to 10% of the proceeds in an escrow and remain liable under the long-term tax indemnity.

Enter Tax Insurance

Similar to the representations and warranties (R&W) insurance wave sweeping the worldwide private M&A market -- where the impact of R&W insurance for buyers is replacing the use of escrows to support indemnification for breaches of representations and warranties -- tax insurance can offer the seller of a private REIT a clean exit.

A private REIT seller will typically provide R&W about, among other things, the REIT's qualification as a REIT from the REIT's inception through the contract signing date. Seller will also make the customary suite of R&W related to tax matters. These representations generally are brought forward to closing. There is a custom tax policy that is being increasingly used in REIT deals that cuts across product lines as a hybrid of R&W insurance and tax insurance – which covers the insured in the event that the REIT(s) are determined post-closing to not have qualified for a pre-closing period, and that also protects the insured in the event that a breach of a tax representation was discovered post-closing. There are also broader, more traditional R&W insurance solutions that cover these risks and more, albeit generally at slightly more cost and retention.

Tactical Earnings Performance

Dec 16, 2014 | by ASATS team

Driving efficiency is key to maintaining competiveness in today’s modern economy. Aon employs a specific set of tools we refer to as Tactical Cost Saving Levers to enable rapid identification and realization of hard dollar savings. Our approach focuses on areas often over looked by companies and leverages proprietary databases and analytic techniques and focuses on the following areas:

Total cost of risk (TCOR): Proprietary TCOR analytics diagnostic relies on Aon’s premium and claims database to evaluate an organization’s performance over 30 quantitative and qualitative performance indicators and benchmarks for the most significant elements of a risk program. Common levers typically considered are:

• Root cause claims analytics
• Accelerated claims closure
• Litigation management
• Leveraging spend in commodity categories such as dental or vision

This can have impact of 10-15% reduction TCOR/sustainable expense reduction.

Creating Line-of-Sight to Accelerate Business and Synergy Results

Dec 16, 2014 | by ASATS team

Aon Strategic Advisors & Transaction Solutions has benefited from guiding our clients through some of the largest global mergers and acquisitions in the past two decades. Our clients rely on us to ensure that their deals succeed and that overall business and synergy objectives are met. This requires a relentless focus on planning and execution, particularly in realizing run-rate savings targets in headcount synergy savings.

A platform solutions approach

Using Aon TransAction Manager™, we help clients identify and plan up to hundreds of organization and headcount synergy cost savings initiatives and related cash impact by month, quarter and year. Once plans are established and prioritized, we work with clients to develop methods for measuring, tracking and reporting synergies captured. This involves mapping and designing new organization structures, identifying the duplicated roles and navigating contractual and legal limits on the timing of headcount reductions. In addition, making sense of data in multiple HR systems of record with workforce that is always in motion (new hires, terminations, etc.) adds a dynamic that can make measurement and reporting of results a seemingly impossible task.

Escrow and Indemnification, a Thing of the Past?

Oct 18, 2014 | by ASATS team

For many years, escrow and/or indemnification has been the standard by which buyers will insure the veracity of the sellers’ representation and warranties and their ability to meet claims from breaches thereof. The negotiations around these escrows and indemnifications can be intense and delay deal closings.

Representation and warranty (R&W) insurance (also known as a warranty and indemnity insurance) is a financially superior alternative to typical escrow and indemnification under any circumstances, where an escrow’s duration exceeds 3 months. From a pure economic value perspective, substituting an R&W policy in lieu of typical escrow can add anywhere between 1-3% of value to any given deal.

As an example, assume a buyer originally offers US $1 billion to a seller, expecting 10% be set aside in an escrow and the duration of that escrow is 2 years. Assume the opportunity cost of capital of the seller to be 20%. Further assume the buyer then decided to replace 80% of the escrow with an R&W policy. Under this scenario, approximately US $23 million in value (2.3% of deal value) is created.