Take the Credit

Credit insurance and solutions can be used to support the entire M&A lifecycle through the use of non-payment insurance, surety, and political risk insurance solutions. These can help to lower the cost of capital, provide off-balance sheet solutions for transaction-related demands for collateral, and enable short-term financing.

One area gaining traction is the use of surety bonds issued by credit insurers to meet the deferred consideration requirements of a deal. This offers both buyers and sellers the opportunity to take advantage of the cheaper cost of insurance capital versus bank capital.

Cash confirmation bonds are also attracting interest, where UK takeover rules require a cash confirmation statement to be filed by a third party and included in the formal announcement of the transaction.

As a result, the credit insurance market can help facilitate deals that might not have gone ahead or might have been executed on more onerous terms to buyer and/or seller. For corporates looking for effective and efficient ways to help manage payment flows and credit risk in an M&A transaction, credit solutions can provide dynamic and hugely effective tools.