9
S P O N S O R
Don’t get hit by the tail
A mong AEC firms in all parts of the country, M&A remains a hot topic; activity continues to be high with many firms being sellers or buyers. Some are even exploring both buying and selling as they look to expand in some areas and limit their business in others. In an M&A deal, the seller’s professional liability insurance for legacy projects will likely come into play. Deal with it early on.
recent M&A transaction, for example, involved a buyer who was in the process of finalizing the acquisition of a firm about one-fourth its firm’s size with a staff of 20 people. “The most common roadblock to closing a deal involves the number of years tail coverage is to be in place and the associated cost – or, more precisely, who pays for the coverage.”
Rob Hughes
In recent months, there’s been a great deal written about the various risks associated with potential deals involving AEC firms, including those involving higher-risk disciplines or project types and how a firm’s claim history may impact a deal. One issue associated with M&A transactions that’s received less attention, but remains a major challenge, is the disruption caused to both seller and buyer when issues involving tail coverage for the seller’s professional liability insurance gets pushed back to the last few days before closing. Specifically, the most common roadblock to closing a deal involves the number of years tail coverage is to be in place and the associated cost – or, more precisely, who pays for the coverage. One
See ROB HUGHES, page 10
THE ZWEIG LETTER October 14, 2019, ISSUE 1316
Made with FlippingBook Annual report