Insurance & Risk Management for Private Equity Firms

DataRisk LLC’s Private Equity Transaction And Leveraged Purchasing practice group “PETAL” provides leveraged purchasing/strategic sourcing and M&A transaction services to private equity firms.  The senior DataRisk executives that comprise PETAL have considerable expertise and experience in this arena, having provided risk & insurance due diligence services for more than 50 private equity transactions and as the broker of record for several private equity portfolio companies.

Leveraged Purchasing/Strategic Sourcing Services:

• Generate significant premium savings by approaching the insurance market as a “purchasing group.”  By insuring all portfolio companies with the same insurer (or insurers, depending on coverage line) the PE firm obtains considerable price concessions from the insurers and better coverage terms and conditions
• Develop insurance protocol across the entire portfolio company platform that adheres to the PE firm’s risk appetite.  This ensures that the investment of the PE firm is adequately protected through standardized coverage terms, policy limits, and deductibles
• Structure policies so that both the interests of the private equity firm and the portfolio company are protected

M&A Transactional Services:

• Complete risk and insurance due diligence on target company
• Review and revise purchase and sales agreement
• Insurance review and coverage gap analysis of target company
• Balance sheet and accrual analysis of pre-closing liabilities.  Negotiate price concessions when the exposure exceeds the book accrual
• Develop insurance budget and identify pricing efficiencies for post-closing insurance program
• Identify the need for and cost of tail insurance.
• Placing of non-traditional transactional insurance coverage
• Environmental impairment
• Representations and warranties
• Loss portfolio transfers

The goal of DataRisk’s PETAL group is to:

• Protect the PE firm’s investment
• Reduce the cost of insurance and retained liabilities
• Maximize cash flow, EBITDA and EBITDA multiple
• Support the PE firm’s exit strategy