1. Transaction Liability Insurance: A Strategic Approach to Deal Risk Management
I’ll work with design to create a TL graphic

2. The Challenge of Deal Risk…
Unknown risks can prevent a deal from closing quickly and leave buyers without certainty.
Post-closing liabilities and holdbacks
Changing tax and environmental regulations
Adequate deal protection
Seller Concerns
Buyer Concerns
Ability to attract buyers
Competing bidders’ terms
What are the challenges our clients are facing
Depending on the audience level, you can use this to educate less versed audiences on market challenges or discuss the current landscape with those more familiar.
Gets the audience on the same page as you
Opportunity to frame the conversation and remind the problems/challenges that you are solving. I can also create alternative slides to allow you to use this with client hot buttons for specific deals.
Claw-back exposure
Extended time to closing
Deal-breaker issues

3. Deal Risk Challenges…Meet Transaction Liability Insurance Solutions
The strategic use of Transaction Liability Insurance can help buyers and sellers reach their goals.
Representations & Warranties Insurance
Post-closing liabilities and holdbacks
Changing tax and environmental regulations
Adequate deal protection
Seller Concerns
Buyer Concerns
Tax
Insurance
Ability to attract buyers
Competing bidders’ terms
What are the challenges our clients are facing
Depending on the audience level, you can use this to educate less versed audiences on market challenges or discuss the current landscape with those more familiar.
Gets the audience on the same page as you
Opportunity to frame the conversation and remind the problems/challenges that you are solving. I can also create alternative slides to allow you to use this with client hot buttons for specific deals.
Litigation & Specialty Insurance
Claw-back exposure
Extended time to closing
Deal-breaker issues

4. Advantages to Sellers Seller Concerns
Transaction Liability Insurance helps sellers
Expedite the sale process
Exit deal with increased funds
Attract best offers
Reduce or eliminate post-closing indemnity obligations
Reduce contingent liabilities
Protect passive sellers
Post-closing liabilities and holdbacks
Seller Concerns
Ability to attract buyers
3. Transition to benefits to sellers
Provide examples
Ask audience about usage?
Claw-back exposure
Extended time to closing

5. Advantages to Buyers Buyer Concerns
Transaction Liability Insurance helps buyers
Increase maximum indemnity and extend survival period
Be viewed as a more attractive bidder
Protect key relationships
Ease collection concerns from distressed or un-creditworthy seller
Provide recourse for unidentified issues
Changing tax and environmental regulations
Adequate deal protection
Buyer Concerns
Competing bidders’ terms
What are the challenges our clients are facing
Depending on the audience level, you can use this to educate less versed audiences on market challenges or discuss the current landscape with those more familiar.
Gets the audience on the same page as you
Opportunity to frame the conversation and remind the problems/challenges that you are solving. I can also create alternative slides to allow you to use this with client hot buttons for specific deals.
Deal-breaker issues

6. A Mainstay of the M&A Industry
Increased use and policy limits by Aon clients
What this means for your deals
Insurance is a strategic part of the bid process for both buyers and sellers
Buyers without insurance are at a disadvantage
Not all deals are created equal
A sophisticated approach to insurance is now a requirement
Policy Limits Placed
Number of Policy
5. The use of TL insurance has grown.
Those not using it are at a strategic disadvantage.
Deals are complex and unique- important to partner with someone who can provide tools, along with strategic advice and deep understanding of the insurance market.
Expertise of Aon TL team, supported by the strength and breadth of Aon. The best of both worlds. “Benefits and resources of a large company, with the individualized attention of a boutique firm.”
*Data based on Aon's placement of R&W policies.
**Data based on Aon's placement of all policies (i.e., R&W, tax, litigation buyout, CFIUS)

7. Transaction Liability Insurance Carriers in 2014….
6. Let’s look at the market just a few years ago.
Only a handful of players in the space

8. ….Fast Forward to 2017
7. Fast forward to today. Increased demand led to increased providers. What does this mean to you?
Flexible solutions, price compression
Even more important to work with someone that can leverage buying power and help negotiate the best option for your deal

9. Representations & Warranties Insurance
8. Let’s take a closer look at R&W insurance

10. Representations and Warranties Insurance
Representations and Warranties insurance allows sellers to close a deal with limited or no indemnity while providing buyer protection for unknown breaches.
Traditional Deal Structure
Representations & Warranties Policy
$10MM
Proceeds at Risk
$0.5MM
Proceeds at Risk
9. Demonstrate how our reps & warranties compares to the status quo.
$99.5MM
Net Proceeds at Closing
$90MM
Net Proceeds at Closing
*Seller may cover a share of policy premium

11. Representations and Warranties Insurance: Enhanced Indemnity
A buyer-side representation & warranties insurance policy may enhance a buyer’s potential for recovery rather than simply replace the typical seller’s indemnity.
Survival Period
Materiality Scrape
Definition of Loss
Limits
10. Review important TL insurance factors.
Please note that I can animate to allow you to tell one part at a time.

12. Representations and Warranties Insurance: Process and Timing
Partnering with a team that deeply understands the sensitivity and timing of a deal is paramount to your success.
Engage Broker 1
Day
Select Insurer
Day 4
Bind Coverage
Day 1 1 2 3 4 5 6 7 8 9 10
Day
2 - 4
Obtain
insurance quotes 2 - 4
Insurer Underwriting and Policy Negotiation
Day
2 - 4 5 - 1
11. Explain the process.

13. Representations and Warranties Insurance: Important Considerations
Required Information
Breadth of Coverage
Cost & Policy Retention
Deal Confidentiality
Deal Team and Service
12. Close section with important takeaways
Please note that I can animate to allow you to tell one part at a time.

14. Tax Insurance
13. Transition to tax insurance

15. Advantages of Tax Insurance
Tax Liability or Tax Opinion Insurance protects buyers against a successful challenge by the IRS or other foreign, state or local tax authority and can help sellers close their deal more quickly.
Key Benefits
What is Covered
Achieves economic certainty
Eliminates the need for escrow
Streamlines negotiations by eliminating deal-breaking issues
Failure to achieve expected tax treatment
Retroactive change in tax law
Manages counterparty exposure
Protect tax positions from challenges
Reduces uncertainty in cross-border deals
Challenges from U.S., state, local or foreign
tax authorities
Recovery for tax, contest costs, interest, penalties and gross-up
14. Frame how tax insurance can meet their goals and what is covered
Gary – I had an incomplete note on this slide. Please let me know what you would like updated.

16. When to Consider Tax Insurance
USA
UK/Europe
S corporations
Tax-free reorganizations/mergers
Section 355 spin-offs
REITs/real estate acquisition/sales
Partnership issues
Employee benefits issues
NOLs
Federal and State Tax credits (e.g., solar ITC, low income housing)
Tax neutral reorganizations
Availability of degrouping relief
Debt for equity tax relief
Substantial shareholdings exemption (SSE)
Offshore and residency issues
REITs
15. Where tax insurance can be used
Should we have a slide on litigation/CFIUS/Bespoke?
*Tax Shelters (listed transactions) are not insurable

17. Litigation and Specialty Insurances

18. When to consider Litigation Insurance
Pending or potential litigation can expose buyers to significant risks and financial liability. Litigation insurance can offset that risk or limit the liability buyers will be responsible for once the deal is complete.
When to consider Litigation Insurance
M&A Deals
Helps sellers avoid substantial escrow requirements
Allows buyers to ring fence the cost of damages from an adverse judgement
Ongoing Business Risk Management
Protects companies from catastrophic loss from an adverse judgement
Possibility of a catastrophic outcome
Pending litigation is preventing a deal from closing
Likely attachment point or retention due to potentially large range of damages
Litigation arguments are well developed

19. Transaction Liability: Claims
16. Transition to claims stats

20. Representations & Warranties Insurance: Global Claims
17. Frame industry stats
Source: AIG Global M&A Claims Study 2017

21. Transaction Liability Insurance & Claims: Aon Policies
Percent of Aon policies that resulted in claims
When to consider Litigation Insurance
2016* 14
3.9 % 11 9 8
2015*
2014 7
12.6 6 6 %
17.6 % 5
18. Comfirm what Aon has been experiencing.
Tax
Employee
All others
Litigation
Financial Statements
Contracts
*More claims for policies that incepted in 2015 and 2016 are likely forthcoming
Compliance
Intellectual Property

22. Transaction Liability Insurance
Questions?