Our Platform / M&A & Bankruptcy
Close the Deal Without the Escrow.
Transactional insurance that replaces escrows, holdbacks, letters of credit, and seller indemnities with real risk transfer — so transactions move faster, cleaner, and at a lower cost of capital.
Transactional Insurance
Traditional risk allocation is expensive, slow, and adversarial. There is a better instrument.
Escrows tie up capital and earn nothing. Holdbacks strain the relationship when the seller is joining your management team. Indemnities leave liability sitting exactly where the deal wanted it gone. We structure transactional insurance that transfers those risks to rated carriers instead — reducing earnings volatility, freeing up proceeds, and, in more than a few cases, resurrecting deals that had reached an impasse.
As part of your deal team, we analyze the structure from a risk perspective, deconstruct the exposures, and build coverage that closes the gap conventional advisors said couldn't be closed.
What It's Worth
A $95M acquisition. A $5M escrow. We replaced it for a fifth of the cost.
A Fortune 500 pharmaceutical acquired a private firm for $95 million and asked the seller to place $5 million in escrow for three years. At the seller's 15% cost of capital, that escrow carried a real cost of roughly $2.1 million in foregone returns — on top of the tied-up principal.
We structured a transactional insurance solution: a $350,000 premium, tax-deductible, for the full $5 million of protection. All-in, accounting for the deduction and the seller's return on the freed capital, the true cost came to about $410,000 — with equivalent protection for the buyer, backed by a highly rated carrier, and less friction with a seller now sitting on the buyer's own management team.
Equivalent buyer protection. Roughly one-fifth the cost.
Why It Works for Both Sides
One instrument. Both sides win.
For Buyers
- Greater certainty in valuation and negotiation
- An expanded universe of viable targets
- Less friction when the seller joins management
- Reduced management distraction from inherited liabilities
For Sellers
- Substantially lower cost than a traditional escrow
- Immediate access to sale proceeds
- Transfer of unanticipated-loss risk to a rated carrier
- A stronger negotiating position and a faster path to close
When "Uninsurable" Is Just Unexamined
A liability three brokers called uninsurable. We placed it in a single reframing.
An American industrial corporation wanted to acquire a European subsidiary in a sector with heavy asbestos exposure abroad. Traditional brokers called the liability uninsurable, and the acquisition was in peril. We deconstructed and re-characterized the exposure — structuring it as a policy that behaved more like a credit risk than a pure asbestos liability — then matched it to carriers with little asbestos exposure and a sound grasp of European political and judicial risk. Favorably priced, placed with a highly rated carrier, deal closed.
Bankruptcy & Basis Preservation
Insurance where an IRS ruling isn't possible — or isn't fast enough.
Companies restructuring debt in bankruptcy often transfer assets to a newly formed entity to preserve tax basis and avoid an unnecessary step-down from cancellation-of-debt income. These structures live in the tension between several Code sections — §351, §368(a)(1), §269 — and the IRS has no standard practice of ruling in the area.
That's precisely where tax insurance earns its place. When there isn't time to secure an advance ruling, or the Service won't issue one, our coverage transfers the risk that expected tax benefits are later disallowed — protecting the deductions the transaction was built around.
Step-up in basis
A newly formed company purchased a debtor-in-possession's assets in a taxable transaction to realize a basis step-up; coverage protected the resulting amortization deductions.
§§368(a)(1)(G), 197, 269
Excess-loss recapture
Tax insurance covered the risk of excess-loss-account recapture arising from a tax-free merger effected within a bankruptcy reorganization, allowing our client to submit the winning bid.
§§368(a)(1)(G), 1502
If a risk is holding up your transaction, put it on our desk.
We'll analyze the structure, deconstruct the exposure, and tell you whether insurance can move the deal — quickly, because your timeline is the point.