Specialist insurance provider CFC has added to its transaction liability suite of products with the launch of a new solution aimed to simplify and speed up the process for private equity firms and businesses pursuing a portfolio of add-on acquisitions for existing or newly acquired platform companies.“While the timing, size and investment strategy behind each portfolio varies, every business looking to purchase add-ons to their platform companies wants a streamlined, efficient process. Having to negotiate a new transaction liability policy for each acquisition adds unnecessary time not to mention cost. We’ve built a solution that gives buyers and sellers the certainty of recourse they require behind each transaction, but without the hassle,” says CFC’s transaction liability practice leader, Angus Marshall.
CFC identified that smaller transactions, such as portfolio add-ons, were going uninsured and developed its portfolio solution to expand the market of insurable risks. The solution can be structured to work on the smallest of add-on acquisitions, with no minimum premium needing to be purchased and no minimum transaction size.
CFC’s solution is to agree a master policy wording at the time of the primary platform acquisition and add on endorsement once each subsequent acquisition is completed. An aggregate policy limit can be agreed upfront based on the anticipated combined enterprise value of the portfolio, or individual policy limits can be agreed for each deal if add-on acquisitions have not yet been identified.
“Our solution can be structured in a number of ways but offers the potential for one limit, one premium, one fee and one aggregate retention across an entire portfolio of companies,” says Grant Hollis, CFC’s transaction liability team leader who designed the solution. “It negates the need for individual policy negotiations delivering a massively more efficient process for smaller deals with the added benefit for the policyholder that additional acquisitions are covered by a partner who they already have a relationship with and trust.”
Having launched its transaction liability business in 2016, CFC is now the largest lower mid-market M&A insurer in the North American market by policy count and one of the largest M&A insurers globally. Its team of experienced M&A attorneys, investment bankers and chartered accountants has won a hard-earned reputation for proactively working with brokers and clients to come up with commercially focussed transaction liability solutions.
