Understanding Mergers and Acquisitions with VP of Operations, Heather Verdui

Heather Verdui

Heather Verdui, VP of Operations

Download our M&A One Sheet below to learn more.

Managing Insurance During Mergers & Acquisitions



Drew: Welcome back to another Axis Angle Interview. This time around we will be talking about Mergers and Acquisitions. Joining me today is Heather Verdui, Vice President of Operations at Axis Insurance Services.

Heather: Hello there, thank you.

Drew: So, Mergers and Acquisitions are a hot topic for many companies, so I thought I’d ask someone who knows how the process works. How would you define Mergers & Acquisitions?

Heather: When any two unrelated business entities enter a contract where ownership changes. They merge and ownership is combined, or one sells to the other, etc.

Drew: What steps in your position do you take here at Axis when an M&A occurs?

Heather: I handle any questions that come about how to calculate the cost of various options the insured is considering, how to provide the proof of coverage in the manner & timing requested, and how to bill the new and cancelled coverages so money is collected from or returns to the correct parties.

Drew: Why do you feel clients need insurance for such transactions?

Heather: Keeping normal business coverages in place during the M&A process is tricky but essential. While owners and managers may be completely caught up in the details of the M&A process, their staff is still conducting normal business on the same day the final paperwork is being signed. Keeping coverage in place up until the change in ownership and then switching to the new coverage the very next day, as business continues, can be tricky.

Drew: What kind of issues have you seen come up during the process?

Heather: In the lead up to the closing date, nearly all of the attention is on the valuation of the company and contract details. This can put off the discussion about insurance not addressed until a few days before the closing date or even after it. This can cause a number of problems such as the selling party not having the right proof of coverage at closing to satisfy the buyers lawyers. The seller may not have considered that the Extended Reporting policy needs to be paid for at the time of binding, while the money from the sale will be delayed 30 days. The seller may not realize that even if they don’t report the sale to their current carrier, the terms of their policy state that coverage is automatically terminated the day ownership changes and they are on a countdown for how many days they have to purchase Extended Reporting.
The buyer may not realize that the seller has little or no option to purchase Extended Reporting due to a poor claim history, or cannot purchase enough years of reporting to satisfy the contract as negotiated. The buyer may not realize what changes they need to make to their own policies to add the new entity, What costs may be involved, or how soon they have to report the purchase to their carrier.

Drew: Why would you recommend a client to work with Axis when dealing with this?

Heather: We work constantly on these type of transactions. This experience lets us have detailed conversations with our clients about both the risks and the process. We can help them spot the pitfalls ahead before they impact the deal, or leave our client unprotected either before or after the M&A is complete.

Mergers and Acquisitions, professional liabilty

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