M&A, Bankruptcy, and Insurance (Part 1)
Page 6 of 8




Best practices for M&A

Best practices for M&A involves having the following items and issues addressed and accounted for:
  • A transition team including core functions
  • Human resources
  • Accounting
  • Finance
  • Administration
  • Operations
  • Computer / IT
  • Open communication with staff of both companies (rumors abound in M&A situations)
  • Corporate structure: subsidiaries, associates
  • History, track record, financial history
  • Key management
  • Regulatory approvals in principle
  • Confidentiality or non-disclosure agreements
  • Accounting Information system
  • HR policies / benefits
  • Workforce
  • Trade unions: collective agreements
  • Compensation
  • Retirement/severance policies
  • ESOPs / 401K / profit sharing
  • Market share / penetration by product lines
  • Competing products
  • Customer base
  • Product mix and pricing
  • New products / product development / substitute products
  • IPR, patents, copyrights
  • Sales force
  • Service facilities
  • Thorough planning regarding merging of corporate record keeping and IT functions
  • Due diligence regarding:
  • Finances
  • Liabilities
  • Risk transfer portfolio: Include a review of the prospective company's insurance portfolio
  • Receivables
  • Assets and liabilities
  • Cash flows
  • Banking relationships
  • Debts, bonds, debentures, mortgages
  • Loan agreements
  • Restrictions and covenants
  • Credit ratings
  • Commitments, liabilities, contingencies

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    Not only are policy forms, clauses, rules and court decisions constantly changing, but forms vary from company to company and state to state. This material is intended as a general guideline and might not apply to a specific situation. The authors, LunchTimeCE, Inc., CEfreedom, and Insurance Skills Center, and any organization for whom this course is administered will have neither liability nor responsibility to any person or entity with respect to any loss or damage alleged to be caused directly or indirectly as a result of information contained in this course.