BMS launches inaugural Private Equity, M&A and Tax Report

Submitted 06/05/2021 - 9:23am

BMS Group (BMS), an independent specialist insurance and reinsurance broker, has launched its inaugural Private Equity, M&A and Tax Report “Redefining M&A insurance for the 2020s”. 

The report provides the first buyers’ perspective  on the way in which M&A insurance interacts with the wider deal-making environment across the globe, as well as giving the first look at behaviours and trends post the onset of the coronavirus pandemic, which saw a frenzy of activity in Q4 2020 to Q1 2021.
 
According to the report: Q4 2020 saw a 25 per cent uplift in transactions using M&A insurance compared to the same period in 2019 and Q1 2021 saw a 21 per cent increase in transactions using M&A insurance was compared to the same period.

Claims notifications are now made on around one-in-five M&A policies.

While pricing remains the most important factor, almost 40 per cent of respondents are more concerned with the scope and breadth of coverage.

Financial statements concern buyers most, but material contracts are also a significant source of claims.

Satisfaction levels with claims handling are high, scoring 8/10.
 
Redefining M&A insurance for the 2020s also gives insight into who buys and who initiates M&A insurance cover, and some of the broader dynamics at play when M&A insurance is used. 28 per cent of respondents had used it in over 10 deals in the last three years (with 50 per cent having used it in 6-10 deals). This clearly shows that the product is vital on most deals and, at the very least, is discussed by parties to a transaction even if it is not always taken up. One respondent noted, “Like any insurance, you don’t tend to expect to make a claim when you take it out. The premiums for W&I seem expensive, but when you do suffer a loss and make a claim successfully, that premium is entirely justifiable.”
 
Tan Pawar, Managing Director and Head of Private Equity, M&A and Tax for BMS in London, says: “2020 was an incredibly busy yet turbulent year for M&A, and our inaugural Report is the first to provide corporate advisors and transaction teams with a clear buyers’ view on the way in which M&A insurance interacts with the wider transactions domain across the globe.  We believe this is critically important given the many changes in deal volume and transaction processes that have occurred in the last year given the impact of the pandemic.”
 
“While claims have risen over the past few years, pricing has remained competitive and M&A insurance has become integral to the deal process. M&A insurance is definitely coming of age. We believe that 80 per cent of private equity transactions in North America now use M&A insurance, while in Europe and the UK the proportion is now firmly around two in every three deals.”
 

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