Risk in Review 2019: North America

01 May 2019

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The M&A market in North America continues to grow more competitive, as strategic and financial buyers alike look to put capital to work. At the same time, the risks facing buyers in the present environment are higher than at nearly any point in the last decade. Against this backdrop, M&A insurance is playing an increasingly important role in protecting acquirers from potential liability at target companies, while also allowing them to offer sellers more attractive terms.

For this report, the first in a four-part series, Aon commissioned Mergermarket to survey M&A legal advisors, private equity and corporate executives in North America for their insights and strategies to help manage risk and close deals in a competitive market.

Key insights include:

• Dealmakers surveyed said the main factor that derails a buy-side deal in the current market is a competing bid being made with better speed or certainty to close.

• In 2018, Aon estimates that over 45% of private North American M&A transactions ranging from $25M to $10B used Representations & Warranties (R&W) insurance, up from 34% in 2017.

• Corporate buyers specifically are increasing their use of R&W insurance — in 2018, corporate acquirers used the R&W solution in 227 deals, an 84% increase over 2017, according to Aon data.