Transaction Liability

 

Aon's global transaction liability team delivers risk transfer solutions for corporate M&A and private equity investment. These strategies can be tailored to protect either the seller's liability under the sale agreement, or to increase the level and scope of financial protection for buyers and their lenders.

Our team increases the deal value by converting deal risk to a one-off premium cost that is transferred to the insurance market. These policies can cover risks that include breach of warranty, tax claims or litigation, or environmental liability. Protection like this gives both sides confidence the company, shareholders, and lenders need to complete the transaction

Reps & warranty/ warranty & indemnity

• Regardless of location, when an escrow's duration exceeds three or more months, representation and warranty (R&W) insurance (aka warranty and indemnity) is the financially superior alternative to typical escrow and indemnification. Typically, substituting an R&W policy in lieu of typical escrow can add 1-3% of value to any given deal.

Tax opinion / tax credit insurance

• Tax insurance can protect against unanticipated or ill-timed occurrence of a tax loss. Transaction parties have often relied upon tax insurance to navigate tax exposures in M&A transactions, and corporate taxpayers are now seeing it as a means to address ongoing business tax risk. Its potential scope ranges from corporate issues (tax-free reorganizations, section 338(h)(10) elections), renewable energy and historic tax credit investments, net operating losses, partnership issues, golden parachute excise taxes, and so on. Insurers will consider submissions in respect of federal, state, local, and/or foreign taxes, making it an effective means of protecting against an unpredictable or catastrophic drain on cash flow.

“We have been recommending the Aon Transaction Solutions team to our clients needing tax insurance for over 10 years. We have closed deals that simply would not have happened without tax insurance. The creativity, professionalism and technical abilities of Aon were critical to achieving the transfer of the tax risk to the insurers”
— Tax Partner at Major NY Law Firm

“Aon team – while we’re waiting for last Ts to be crossed on the merger agreement, I wanted to thank you for your excellent and tireless work and your leadership with the insurers. The [transaction] we are about to sign most definitely would not have happened without this highly-bespoke insurance. Great job, greatly appreciated by both law firms and both clients”
— M&A Partner at Major Law Firm