Life Insurance Firm Secures $18M Acquisition, Minimizing Risk and Enhancing Cash Flow

Challenge

A life insurance and retirement solutions company, part of a highly regulated industry that transactional risk insurers often shy away from, was interested in acquiring a business valued at $18 million. After deal completion, the sellers would exit the business. Part of the sellers' ownership included generational trust entities, which they wanted to shield from post-sale liability.

Because of the nature of the deal, Hylant's client wanted to use representations and warranties insurance (RWI) in the deal to backstop the sellers' obligations.

Solution

Hylant's M&A and Transaction Solutions team leveraged its extensive network of insurers to find just the right one to support this transaction and possible similar transactions in the future. The chosen insurer understood the company's due diligence process and felt comfortable enough on this and future transactions to invest in their acquisition strategy.

Hylant, working with the buyer's inside and outside legal counsel, helped modify the transaction structure to:

• fit the needs of the seller and buyer, alleviating risk from certain trust entities for post-close liabilities;
• customize the insurance policy wording to make it fit for purpose, which limited backstop liability to certain selling entities while isolating entities whose liability would be minimized; and
• deliver an outcome that fit within the financial parameters of the deal.

With RWI in place, the buyer was comfortable finalizing the transaction, and the sellers benefited from reduced escrow financial obligations and increased protection from any breach.

See how Hylant can help you reduce uncertainty, safeguard investments and maximize financial returns during complex transactions.