Case Study
Portfolio Program Solution
The Request
RWI for buy-and-build acquisitions
Company Profile
Acquirer Type: Private Equity Fund
Strategy: Buy & Build/Roll-Up
Target Industry: Accounting Firms
Brown & Brown was engaged by a private equity customer to place representations and warranties insurance (RWI) in connection with the acquisition of a new platform portfolio company. The PE fund’s strategy for the portfolio company relied heavily on executing a robust and efficient “buy and build” strategy, including executing many acquisitions of small competitors with low enterprise values.
The customer wanted to use RWI across the strategy to adequately protect its limited partners while also enticing potential sellers and differentiating their bids in competitive auctions. The customer recognized that the strategy presented significant challenges for using RWI insurance, including maintaining an efficient process over many transaction in a short period of time, with may targets having smaller enterprise values than typical insured transactions.
The Solution
Efficient RWI portfolio program
Create a simple, economic and efficient program that would allow the Private Equity Firm to execute its vision for deploying RWI across its roll-up strategy.
Brown & Brown implemented an innovative RWI portfolio program solution for the specific portfolio company and placed it with one of the industry’s most respected RWI carriers.
The Results
1. Master & individual policies
2. Economic efficiencies
3. Flexibility & streamlined process
The portfolio program included:
- Master RWI Policy where limits aggregate” across all the platform’s transactions
- Each transaction had its own individual policy with dedicated limits but also was endorsed onto the “Master RWI Policy” with an aggregate limit of liability applicable to and accessible for, any transactions
- Economic efficiencies, including:
- Preferential premiums/rates-on-line,
- Lower minimum premiums,
- Reduced underwriting fees
- Streamlined underwriting process.
Importantly, the solution did not impose any requirement of the PE Fund to use the carrier or even purchase RWI for any of the add-on acquisitions, giving the PE Fund maximum flexibility and maintaining leverage.
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