Transactional Risk in M&A and Private Equity: Insurance Trends in 2022 | Woodruff Sawyer

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Part of every transaction’s due diligence process is the insurance and risk management workstream. Insurance and employee benefits due diligence is becoming more and more important to private equity firms looking to protect earnings before interest, taxes, depreciation, and amortization (EBITDA) of their new platform and effectively integrate new add-ons onto existing platforms. If executed poorly, acquirers and investors alike may leave themselves exposed to increased risks that could negatively impact EBITDA in the short term and diminish the value of the asset in the long term.

Including an expert insurance advisory team on the due diligence team will help avoid or mitigate these land mines, protect the investment in the short and long term, and ensure a cleaner exit. During due diligence, it’s critical for a deal team to understand the risks faced by the target company details of both the insurance and employee benefits programs.

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