Transaction insurance products gain prominence amid M&A market rebound, according to Aon and Mergermarket

NEW YORK, July 1, 2021 /PRNewswire/ -- Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, and Mergermarket, a provider of intelligence, data, and analysis of global M&A, today released the latest edition of their M&A Risk in Review report. The 1H 2021 report explores investors' M&A expectations for the next 12 months, the sectors they believe will outperform expectations, the strategies employed to mitigate key risks beyond COVID-19 and how and why the suite of available M&A insurance products are being used, among other areas. This report is based upon surveys of senior executives from corporate development teams, private equity firms and investment banks.

Aon and Mergermarket found the overarching trend of M&A insurance becoming more mainstream, which means that whether deal activity continues its recovery trajectory or is interrupted by further economic disruptions, these policies are becoming an increasingly common feature of deals.

"The resiliency we have seen in the M&A industry has been remarkable," said Gary Blitz, Co-CEO of Aon's M&A and Transaction Solutions practice. "Our latest M&A Risk in Review report provides insight into the strategies that dealmakers have adopted to navigate these volatile times and their views on the future of M&A."

In the latest survey, the results support this expected trend: 88% believe their use of representations & warranties (R&W, also known as warranty & indemnity, or W&I) insurance will increase over the coming 12 months, including 40% who expect it to increase significantly.

Additional key findings from the report include:

• Along with use of R&W insurance on traditional buyout transactions, a growing number of minority deals utilized insurance along with other unique applications, such as secondary and de-SPAC transactions, which proliferated in 2020 and into 2021.
• M&A activity spiked dramatically in Q3 and Q4 2020, with the final quarter of 2020 seeing the highest quarterly global M&A value total for five years. The momentum carried over into 2021, with U.S. deals hitting record highs in Q1.
• The risk mitigation strategy that most respondents can envisage themselves adopting in the future is pursuing more minority deals/Joint Ventures (52% identify it as one of their top two likely steps).
• Critically important sources of funding are expected to include private equity (62% say it will be among the top two sources) and non-bank lenders/credit funds (44%).

The full report is available here. 

Aon's M&A and Transaction Solutions is a leading provider of transactional liability insurance, including representations and warranties insurance, tax insurance, litigation buyout insurance and related claims facilitation services as well as specialist due diligence services to the Private Equity and M&A industry. Its capabilities extend across a broad suite of services from Risk & Insurance, Human Capital, Cyber Security and Intellectual Property. Clients also benefit from its depth of knowledge and experience as the leading and innovative structurer of transaction insurance instruments in EMEA, including Warranty & Indemnity, Tax, Litigation, Credit and Surety solutions.

About Aon

Aon plc (NYSE: AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

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SOURCE Aon