Risk
Risk due diligence–middle market targets

 

ASATS Case Study: Risk Due Diligence – Middle Market Targets


Client situation

The target company was a division of a larger parent. The seller annually allocated expected retained losses to the target but wanted the buyer to assume responsibility for pre-closing claims.

Aon solution

Aon identified that the target would be double-paying for pre-closing claims and assisted legal counsel and the buyer to push responsibility back to the seller.

Client situation

The target company had liabilities related to alleged criminal / fraudulent acts tied to options backdating and accounting irregularities.

Aon solution

Aon helped identify and quantify the potentially uninsured D&O liability, resulting in a purchase price reduction. Obtained a "one-of-a-kind" risk transfer to protect the target and buyer against future claims.

Client situation

Target company had pre-closing environmental contamination.

Aon solution

Aon successfully placed coverage for pre-existing environmental matters with the seller paying the premium.

Client situation

A private equity client wanted to sell a portfolio company that had recently made an asset purchase of a small automotive device manufacturer. The prospective buyer was concerned about successor liability related to the automotive device because the original seller of that business had purchased claims made coverage and was only required to carry coverage for 2 years post-closing.

Aon solution

Aon developed and placed US$ 50m discontinued products coverage covering all unknown occurrences related to products ever manufactured by the company under any ownership for three years, (with no deductible) enabling the PE client to sell the business.

Client situation

A buyer sought to acquire a subsidiary of a public competitor via a stock sale. The seller agreed to provide broad indemnity for all pre-closing liabilities, however the buyer had concerns about the seller's on-going viability.

Aon solution

Aon placed a US$ 25m representations & warranties policy to cover all indemnifiable losses, but only in the event the seller became insolvent.