BMS Private Equity, M&A and Tax insurance report gives unique customer perspective

By: Newsroom

M&A insurance comes of age in 2020, with a surge in activity in Q4 2020 and Q1 2021.

BMS Group (“BMS”), the independent specialist insurance and reinsurance broker, has launched its inaugural Private Equity, M&A and Tax Report “Redefining M&A insurance for the 2020s”.

The report provides a holistic viewpoint on the way in which M&A insurance interacts with the wider M&A sphere across the globe, as well as giving the first look at behaviours and trends post the onset of the coronavirus pandemic, which saw a frenzy of activity in Q4 2020 to Q1 2021.

Highlights include:

  • Q4 2020 saw a 25% uplift in transactions using M&A insurance compared to the same period in 2019 and Q1 2021 saw a 21% increase in transactions using M&A insurance was compared to the same period.
  • Claims notifications are now made on around 1 in 5 M&A policies
  • While pricing remains the most important factor, almost 40% of respondents were more concerned with the scope and breadth of coverage.
  • While financial statements is the issue that concerns buyers most, material contracts is also a significant source of claims.
  • Satisfaction levels with claims handling were high, at 8/10

The report also gives insight into who buys and who initiates M&A insurance cover, and some of the broader dynamics at play when M&A insurance is used.

Tan Pawar, Managing Director and Head of Private Equity, M&A and Tax for BMS in London, commented: “2020 was an incredibly busy yet turbulent year for M&A, and our inaugural Report is the first to provide a uniquely user-centric view on the way in which M&A insurance interacts with the wider transactions domain across the globe. We believe this is critically important given the many changes in deal volume and transaction processes that have occurred in the last year given the impact of the pandemic.”
“While claims have risen over the past few years, pricing has remained competitive and M&A insurance has become integral to the deal process. M&A insurance is definitely coming of age. We believe that 80% of private equity transactions in North America now use M&A insurance, while in Europe and the UK the proportion is now firmly around two in every three deals.”

The full report is available here.