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  • Renny Sie | Forging Relationships with Founders and Family-Owned Businesses
    POSTED 2.22.22 M&A Masters Podcast

    On this week’s episode of M&A Masters, we’re sitting down with Renny Sie, Vice President of Business Development and Investor Relations at the private equity firm Boyne Capital.

    Established in 2006, Boyne Capital takes a different approach to investing—one that forges lasting and collaborative relationships with companies whose founders and families are still deeply involved in growing their businesses. It’s a term they call a value cultivator approach.

    Renny says, “Partnership is extremely important to us. The fit is important because this is going to be a long-term partnership to grow this thing together and make it bigger and better for everyone.”

    Listen to discover:

    • How to propel family-owned businesses to the next level—partnering NOW to prosper in the future
    • Boyne Capital’s unique value cultivator approach to the lower middle market—building the right team through focusing on relationships, recruiting, and retention
    • Why they feel that Rep & Warranty Insurance is an important component for their deals

    And much more

    MENTIONED IN THIS EPISODE:

    TRANSCRIPT:

    Patrick Stroth: Hello there. I’m Patrick Stroth, trusted authority in executive and transactional liability and president of Rubicon M&A Insurance Services. Now a proud member of the Liberty Company Insurance Broker Network. Welcome to M&A Masters where I speak with the leading experts in mergers and acquisitions. And we’re all about one thing here. That’s a clean exit for owners, founders and their investors. Today I’m joined by Renny Sie, Vice President for Business Development for Boyne Capital. Boyne Capital was established in 2006 in Miami, Florida, with a focus on investing in lower middle market companies. Boyne has a unique approach to investing. It’s an approach to forges lasting and collaborative relationships with companies whose founders and families are still deeply involved with growing their business. It’s a term they call a value cultivator approach. Renny is a pleasure to have you. Thanks for joining me today.

    Renny Sie: Thank you, Patrick. It’s great to be here.

    Patrick: Now, before we get into Boyne Capital and the value cultivator approach, I just think is a unique wording there. So that’s, that’s very, very interesting. Let’s start with you. What brought you to this point in your career?

    Renny: Oh, gosh, where do I even start? I guess I have what you call a non traditional background. So starting from the very beginning, I was born and raised in Jakarta, Indonesia, the oldest of three siblings, the first one to actually go to college. I came to the US to attend college at California State University Fresno. So right by you. And my major was classical piano performance. After graduating from CSU Fresno, I went on to do my masters and then audition to a bunch of different schools to try to find a scholarship for me to keep going to school, because I liked school that much. Eventually ended up in University of Miami Frost School of Music doing my doctorate in classical piano performance. So did that until 2016. And then I found myself married with a young child and then realize that, oh, my I’ve been doing this for my whole life, and it’s not going to pay the bills, unfortunately. 

    Patrick: Yes. 

    Renny: My husband told me I should go back to business school and get MBA and I told him, he was crazy. But I’m glad I took the chance, went back to business school at University of Miami did a full time MBA three year program there. Interned with Goldman Sachs in the summer, took a full time job with them in their Florida office. Three years in learned a lot from Goldman. Really enjoyed working there. But always had a knack with entrepreneurship and private equity and that world. My dad is an entrepreneur. So I got in touch with Derek McDowell at Boyne Capital. And technically I basically just asked him for a job and he gave me he gave me a chance. So that was more than three and a half years ago, I’m still sitting happily here at Boyne Capital. My primary focus here at Boyne is deal originations and LP relations. So what that means is, I connect us with the potential sellers or what we call potential partners.

    Patrick: And so you’re around that connection. Is there any, you know, the skill set you have from being a high level concert pianist, into the financial world? I just it that’s a really unique matchup.

    Renny: Yeah, I would say, you know, contrary to popular belief, people think that artists or musicians are on a creative side. Or more prone to creativity, you know, an art side. I’m not. And I think most of my colleagues in the music world isn’t either. We’re trained to like stare at tiny little notes and tiny little details. So I would say that we have really attentive to details. That’s one.

    Patrick: Focus, yes.

    Renny: And then when, focus and then the discipline, you’re used to like practicing eight, nine hours a day, I guess, without paying for, without, like actual benefits, right? Other than getting better. So those skills that like I brought over and I have found like my training in classical music has been very helpful.

    Patrick: Tell me about Boyne. And why don’t we start with this? How did they come up with the name because that usually gives you some insight into the culture and the founder.

    Renny: Yeah, so like I said, Boyne was founded in 2006 by Derek McDowell, our CEO and Managing Partner who today still very involved in all aspects of the firm. The name Boyne Capital came from River Boyne in Ireland. A very pretty river. So I’m not sure about what specials are of Boyne, I should probably educate myself about that. But that’s where it came from. We are a lower middle market focused private equity firm. We are based in Miami, there is 26 of us sitting in Miami, which is crazy, because when I joined three years ago, there’s only 16, 17 of us. 

    So we have grown a lot, which is exciting time. And lower middle market is what we define as companies with EBITDA between three to $15 million, typically revenues under $100 million. And you asked me why lower middle market space? You know, it’s because I think we can provide the most value in this space. You know, lower middle market companies, often are family owned, you know, and they usually do not have either the infrastructure or the capital to grow on their own without eating into the sellers, or the management teams time and personal capital, right. So that’s where we came in. We we like to partner with business owners management team, or, you know, I guess the sellers, in this case. 

    We do majority recapitalization and usually position ourselves as a solution provider. Because if you think about it, most business owners think about PE partnerships as an exit route, right? Is like oh a PE firm wants to buy me, therefore, I must exit 100% and give give them the keys to my house. But that’s not usually the case. Especially not with us. With us, it’s not 100% exit. And for the most part, we actually do not encourage that. We encourage them to hang on to a minority equity, because we will help them grow their business. Together, we’re going to maximize enterprise value, and then they will actually have a much bigger exit the second time around.

    Patrick: Yeah, that second bite of the apple.

    Renny: Correct. Yeah. And that’s where the value cultivator concept come in, right. We always joke internally. We’re not good at leverage buyout, but we’re excellent in leverage buy in. So we buy into those, those management teams and those owners of the businesses and really support them through their growth initiatives. And, and there are many ways that I can go into detail with examples of how we how we support them.

    Patrick: Well, I think that is very helpful, because there are a lot of owners and founders that they reach an inflection point, some of them are looking for an exit. And then it says, well, do they really want an exit? Or do they just want to change, they just don’t know how to do it. And as we’re finding a lot of owner founder businesses, where an owner can, you know, commences a process, then all of a sudden, is reluctant and starts dragging their feet there, which can get very, very frustrating, because they really didn’t want to give up something that was the core of their life. And, you know, and there are those that do want to do that. And there’s an avenue but the others that they don’t want to give everything away, they’ve spent a lifetime building something. 

    And there, as I mentioned, the inflection point where they’re, they’re too small to be enterprise, but they’re too big to be small now. And so what do they do? And they just don’t know where to go. And unfortunately, and this is why we wanted to go and meet with Boyne Capital is that if they don’t know, the owners of founders, if they don’t know about Boyne Capital, they may default to you know, partner with a strategic that may not have their best interests at heart, or they’re going to go to an you know, an institution and you know. Where, where if you go to an institution, you’re going to get underserved, you’re going to get overpriced, and you’re not going to get what you really wanted. 

    But a lot of people don’t know about this. And the thing with Boyne Capital particularly is, okay, you started in 2006. In 2019, there are over 5000 private equity firms now, okay. More than half of them look to the lower middle market. And so, you know, you have to have something unique that comes and speaks to these owners and founders depending on what they want. If the ones that want an exit, they can go someplace others that want to get to that other side and see how to cross the finish line. They can come to an organization like Boyne. You mentioned that with your value cultivator approach. There are a couple ways that that manifests. Give us a couple of examples if you could.

    Renny: So for most of our platform, investments, like I said, typically they don’t have the necessary key executives in place. Typically, like a CFO or controller, that they would actually have to go out and hire and recruiting and hiring takes a lot of time away from the CEOs from running the business. Right. So our team, our operations team in house has a team of operations people that actually work hand in hand with the portfolio company management team to do financial reporting and you know, executing their growth plans, talking through strategy, and within the team, my colleague, who’s whose title is VP of human capital, and she’s been instrumental in hiring and adding key hires to portfolio companies as they become on board so the management team doesn’t have to. 

    You save time, and that’s definitely a valuable thing to present to potential partners. And then also, of course, you know, when when you’re trying to grow by acquisition, you’re trying to do it on your own. It is a huge undertaking, right? Even if you’re doing it, not to sell your company, but to acquire companies to grow your own. It is helpful to have somebody like us, you know, with capital and more than just capital, to help you execute, identify targets and make sure that you’re going down the right path.

    Patrick: Yeah, experience helps, doesn’t it?

    Renny: Yeah, for sure. For sure. And also, like, given the pandemic, some businesses, you know, thrive, some businesses didn’t. But I bet a lot of business owners would not want to go go through that again, alone. Helpful always have a partner.

    Patrick: Yeah, I can imagine. Well, the other thing is key when you’re, you got the skill set with the human capital, particularly now, it’s not only a challenge to recruit, but it’s retain. And I think, probably what you have is a great skill set and an advantage on that front. The other thing that’s interesting is that you’re not coming in and the the procession with a lot of private equity firms from outside is that the private equity firm is going to come in, as you said, load them up on debt and do a lot of financial reengineering. You don’t do that. You’re looking at no, we want we want to go ahead, and we’re going to reset and get some operations and get people in.

    Renny: That’s right. So for from our side, partnership is extremely important, right? The fit is important, because we have the mindset of like this is going to be a long term partnership to grow this thing together to make it bigger, make it better for everyone. So it’s not just kind of like acquire and hold or like come in and clean house and put in as much as our people on the board. No, it’s not that. So every single major decision making is made in partnership with management team. So we think that’s very important. Again, there’s like something for everyone, right? So if someone wants to, like retire 100% and hand over the keys, probably not for us. Like if someone who wants to actually a partner who supports their growth and willing to roll up our sleeves and actually do the work. Like putting in infrastructure putting in NetSuite doing key hires and actually clean up everything and make it you know, better and more more professional, then we would probably be a good fit.

    Patrick: Talk about, you mentioned lower middle market, where you’ve got owner and founder involved. Fill out the profile. What’s the profile of Boyne Capital’s ideal target? What are you looking for?

    Renny: So aside from the financial profile, three to 15 million EBITDA, revenue under 100, typically what we look for some some a business with good growth potential, proven profitability. I guess that’s probably kind of normal. But someone who has grown their business to a point that they can’t anymore, or they need help to do more, and they want to do more, right. So that’s the key. So like you said, it’s inflection point, but they want to push through that inflection point. Instead of like okay, this inflection point, and I think I’m done for the day. And in terms of industries, we’re pretty agnostic. We like business services, more acid like businesses, you know, in a bunch of different different verticals. And we have an areas of interest that we’ll list on our website, if you want to go and check it out. But most importantly, it’s a partnership. It has to be with the right management team, yeah.

    Patrick: So that’s the, that’s where the fit is. Any issues on geographical?

    Renny: We invest in US and Canada. If you look at our current active portfolio, portfolio companies or even former portfolio companies is all over the place. We have companies in Florida, California, Wisconsin, Kansas City. Officially, we are looking for investments in Canada, we just haven’t found one yet.

    Patrick: One of the recent trends has been happening in mergers and acquisitions and why we’ve had such a big growth in private equity is the successful transition that M&A transactions are having right now. They’re happening more efficiently. They’re happening, cheaper, faster, all those other wonderful terms that you have, and one of the reasons why the industry has gone from a few 100 private equity firms to 5000 today is that the transactions themselves are a lot easier to execute. And one of the byproducts of that, or one of the creators of that has been that there’s been a product out in the insurance world called reps and warranties insurance. 

    And what it has done is really elegantly transferred risk away from buyer versus seller, to a third party with deeper pockets so that if both parties can transfer risk for reasonable price, okay, deals go forward. And not only do they close, but then the post closing transition is that much easier, because again, you don’t have one party against another. And so you know, don’t take my word for it. Renny, good, bad or  indifferent. What’s your experience been with rep and warranty insurance?

    Renny: I totally agree with you, Patrick. We have had a very good experience using it as a way to take a major area of buyer seller negotiation off the table. For many of our transactions. I think we use it in about like 80% of our platform transactions now. And it removes the often contentious issue of escrow size and exposure cap for seller indemnification. And it gets more cash in their pockets at closing. And it still protects us from from unknown issues in the business that are discovered, put close. So we’re a big proponent of rep and warranty. And we will, we will continue to keep using rep and warranty insurance. And now the rep and warranty insurance market is so robust. So there’s we can typically find good coverage and options for pricing.

    Patrick: I could not have said it better myself. Thank you. Thank you so much. I think one of the great things about the platform we want to bring to people’s attention in the audience is that reps and warranties used to be a product reserved for deals at $100 million dollar enterprise value and up. They had rigorous due diligence requirements, financial requirements, all those things, and the price was still relatively good. But the eligibility criteria to get in was difficult, particularly for the lower middle market. And what’s great is there’s been a new product that’s been introduced that provides a sell side rep and warranty policy. And it protects sellers and the buyers involved in deals at a $15 million transaction value and down. 

    So you can buy up to $10 million in limits on a 10 or $11 million company and cover everything all the way up to the thing. It’s a fraction of the cost. And what’s nice is the more that organizations like yours and lower middle market are aware of this because it’s not only good for platform acquisition, but for add ons, which usually you know, you had to go bear because they weren’t eligible. Now it’s there. So it’s one of those things we wanted to make sure we pointed out to everybody. Renny, as we just turned the corner from 2021 to 2022. And I don’t see robust M&A activity dropping anytime soon. Share with me, what trends do you see either an M&A or Boyne Capital? Tell me what you see.

    Renny: So I can’t predict your future, Patrick. I don’t have a crystal ball. But what I can tell you is like I think the trend of what we were seeing in 2021 has been going to continue. Just from macro environment, the pandemic, I guess, is still here, surprisingly, right. So people still have that mentality, probably they don’t want to go through another round of difficulties alone. So that’s going to drive some activity. And some people probably have some difficult situations happen with, you know, house, or family that got them to rethink their priorities. And maybe they want to step back, retire from the business. And some people probably want to start their own business because like they quit their corporate jobs, right. So those definitely will contribute to stronger M&A environment. And things like tesco changes, also. So a lot of things that could potentially make it even more robust, or whatever it is, you know, like I see just good things, hopefully happening in 2022. We are excited to see what it has in store for us.

    Patrick: I completely agree. I mean, one of the things that I’m stealing from a prior guest is that, you know, we have economic cycles come and go. Pandemics are going to come and go and tax changes are going to come and go. One thing that is gonna be constant is time. And as you know, a lot of these owners and founders, many are baby boomers, they’re getting to the point where they’re going to reach their own personal inflection point. And that’s that’s going to be father time. So I think that there’s going to be a very large transition as we go forward. And that’s going to carry forward I believe, sincerely for the next couple of years. But, you know, we’ll keep our fingers crossed and hopefully, things things will move as they’ve been moving. So this is good. Now Rennym, how can our audience members find you and Boyne Capital?

    Renny: First place to check is our website and www.boynecapital.com. And it’s spelled B as in boy, O as an Oscar, Y, N as in Natalie, E as an echo capital.com. You can find myself there with my contact information. It’s Renny Sie, I always tell people it’s like Jenny with an R. It’s easier. My email is rsie@boynecapital.com. It’s spelled R as in Robert, S as in Sierra, I as in echo. No, I as in Italy, E as in echo @boynecapital.com and you can call me at 305-856-9500.

    Patrick: Fantastic, Renny Sie from Boyne Capital absolute pleasure talking to you in this value cultivator approach. I really, really like it. It’s very, very refreshing. It’s just, it’s this abundance thing where you take something you’re just going to make more for everybody and I think it’s just very, very positive. Thanks for joining me today.

    Renny: Thank you for having me, Patrick. Take care.

  • Domenic Rinaldi | The Number One Pitfall in M&A Transactions
    POSTED 6.22.21 M&A Masters Podcast

    On this week’s episode of the M&A Masters podcast, we sit down with Domenic Rinaldi, President and Managing Partner of Sun Acquisitions. Sun Acquisitions is an M&A advising firm specializing in both buy-side and sell-side advisory services. Domenic also hosts his own podcast, M&A Unplugged, ranked among the top M&A podcasts of 2021. 

    From a young age, Domenic had an itch to own his own business. In discussing why he chose the details of Sun Acquisitions, Domenic says, “Quite frankly, I love the lower middle market. They have more sophistication, more infrastructure, but they don’t necessarily have the money for the advisory groups…so they need firms like ours.”

    We chat with Domenic about his path to owning Sun Acquisitions, as well as: 

    • The ideal client both on the buy-side and sell-side
    • Encouraging empathy in M&A
    • Experiences with rep and warranty
    • The importance of preparation when it comes to transactions
    • Using podcasts to help spread information
    • And more

    Listen now…

    MENTIONED IN THIS EPISODE:

    TRANSCRIPT:

    Patrick Stroth: Hello there. I’m Patrick Stroth, President of Rubicon M&A Insurance Services. Welcome to M&A Masters where I speak with the leading experts in mergers and acquisitions. And we’re all about one thing here, and that’s a clean exit for owners, founders and their investors. Today I’m joined by Domenic Rinaldi, President and Managing Partner of Sun Acquisitions. Sun Acquisitions is an M&A advisory firm based in Chicago that specializes in both buy side and sell side advisory services. Dom is also the host of the M&A Unplugged podcast, which was recently ranked among the top M&A podcasts for 2021. So we have both M&A, and podcasting in common. Dom, so great to have you. Thanks for joining me.

    Domenic Rinaldi: Hey, Patrick, thank you so much for having me such a pleasure.

    Patrick: Now, before we get into Sun Acquisitions, and M&A for 2021, let’s give our listeners some context here. Let’s talk about you. How did you get to this point in your career?

    Domenic: Yeah, so you remember that commercial a long time ago doesn’t look like you and I needed it. But the men’s hair club, you know, not only am I the owner, but I was a client. Very similar story. I, many years ago, was in transition and was trying to decide what I was going to do next, I launched a business search, I just I had always wanted to own a business from even a very young age, I was always very entrepreneurial, I had my own paper routes, I was, oh, have my own lawn mowing business. I loved to doing my own thing. And I think from a very young age, I really always wanted to own my own business. 

    But for many reasons we won’t get into, I launched a corporate career. Next thing, you know, you wake up 30 years later, and you’ve got you know, all this, you know, all these things you’ve done, but you’ve always had this itch to own your own business. And so I decided in my early 40s, that I really wanted to own my own business. And I had done the analysis of should I start something or should I buy something. And for me, the safer route was to buy something because I had what I call a train to pull. Meaning I had young kids, college education ahead of me, a mortgage. 

    So I wanted an ongoing concern with you know, ongoing cash flows and clients and, and so I initiated a business search, and I did it on my own. And the long the short story here is in doing all of this, I really got enamored with the M&A business. And lo and behold, as I’m doing my research and opportunity presented itself. It was a small little advisory firm that was for sale, did some diligence actually did a good number of months of diligence, and decided that this really was a path forward for me. And so I bought this business. And here I am, almost 20 years later, we’ve you know, 10, more than 10x, almost 20x the business since then. And it’s been a great ride.

    Patrick: You and I are both right around the same age. But we were just coming out of where everybody’s joining big corporations. And the idea of going out and starting your own little firm out there was daunting, because it was still it was there on the periphery. But if you grew up in a city or in a metropolitan area, you just had all the big companies around, so completely understandable. So now we go on to Sun Acquisitions. And let’s talk about that real quick. You bought it as an existing business. So tell me about you know, where the name came from? Why didn’t you name it Rinaldi and and just give us a description of Sun Acquisitions.

    Domenic: Yeah, so actually, I wound up rebranding the business, but only slightly. And what I thought was important in in talking to our webmasters, and our and our social media people is that our name should be descriptive, that the more descriptive it was, the better we would show up in search engine rankings and things like that. So really, I did it. We named it Sun Acquisitions, because we wanted acquisitions in the name. We wanted people to know that this is what we did. So when they came to us, there’s no mystery and from a search engine perspective, looking back now, it’s really worked out for us.

    Patrick: And then your your focus is more toward the lower middle market as opposed to the larger deals. So give us a context size and why the lower middle market as opposed to other you know, larger size.

    Domenic: Yeah, so when I was going back again to when I first bought the business, actually, it was really focused on the small business market, mom and pops and smaller businesses and, and so over the years, we’ve left that market and we’ve gravitated to lower middle market. Quite frankly, I love the lower middle market. It they have a little more sophistication than the small businesses mom and pops, they have more infrastructure. 

    And but they they don’t necessarily have the budget for the advisory groups that the big, the big boys do, right. And so they really need firms like ours, at at sort of price points that we’re at, that can help them both get their arms around what the value of their businesses are, if they’re if they’re selling or understand what the market’s like if they’re buying and then go out and help them get those acquisitions or those sales done.

    Patrick: Yeah, well, I, what I what I love about the lower middle market is, you know, it’s vast. And it’s established to a point where you know, that these companies, they’re, they’re too big to be small, but they’re too small to the enterprise. And, you know, they’re not aware of all the services that are available to them that are not at that retail higher price. And that’s why I love having having you on here just to spite the spotlight while you’re doing because if if they don’t know about you, and Sun Acquisitions, what happens is a lot of owners and founders that are looking at exit, they default to either a strategic acquire that may not have their best interests at heart. 

    Or they may go to some institution that, you know, they’re going to be overcharged and underserved. And really, there’s great value that you’re going to bring because you’re doing not only, you know, sell side advisory you’re doing buy side. So distinguish the two types of services for us, because you can bring, you know, a prospective seller buyers to the table or attract them and, and vice versa. So talk about one side of the table and the other side.

    Domenic: Yeah, so the sell side, we are representing owners of privately held companies who want to understand the value and the market timing and whether or not now is the right time. And if they are ready, we’ll represent them and take them out to the market confidentially and represent them throughout the entire process. On the buy side, there are buyers who want professional representation. They want firms like ours that will go out and essentially make a market. And on the buy side, what we’re doing there is bringing discreet proprietary deal flow to our clients. So we’re not bringing them deals that are on the marketplace, which right now, if it’s a decent quality deal is probably getting a lot of action, we’re going into the marketplace. 

    And we’re trying to uncover opportunities with owners in businesses that are not on the market for sale, and see if they’d have an appetite to talk to our buyside client who is also paying our fee. And so that’s how we distinguish between the two and right now that the buy side part of our practice is exploding, because there just are so many buyers out there in the marketplace.

    Patrick: And I can imagine these are largely strategics or do you have smaller private equity firms that work with you?

    Domenic: So largely strategics. But we do have some private equity groups that have retained us to go out and do this work for them as well.

    Patrick: Oh, I would think for private equity is an ideal fit to have Sun Acquisitions help them because when you’re you know, looking for proprietary deal flow, that’s a fancy way of saying you’re cold calling. And you’re you’re going out reaching out to owners and founders that may not be in the mindset to take those types of calls yet, and they come around, but at the time, that’s as a real tough slog and have a professional like you that can bring those to them, I think is a great value add that you bring.

    Domenic: Well, and the other thing that we hear from owners who have been contacted directly by private equity groups, because for a lot of private equity groups do this work themselves. But the things that we hear time and time, again from owners that have been contacted directly is they didn’t want to go down that path. They felt like they were overmatched. They were in over their heads. And they felt like they needed professional representation. So if a private equity group outsources to us, even though we represent the private equity group, we’re much less intimidating to the owner of that business. When we do that outreach, and we try to make that match.

    Patrick: Talk about the ideal profile for Sun Acquisition. Give me a profile of your ideal client both on the buy side and sell side.

    Domenic: You know, so I’d say on the sell side, we’re, you know, we’re largely working with companies that are a couple of million dollars of enterprise value up to $40 million. That’s usually our sweet spot. We’re fairly industry agnostic, although I admit we don’t do deals in energy and agriculture. We tend to steer steer away from retail, and restaurants. Those are just not places that we tend to focus on. 

    On the buy side. We’ll do transactions from you know, a million dollars up to a couple of 100 million depending on what our client wants, we represent both international and domestic clients. And we’ll do it in any industry they want. And we’ll even do international searches, which we’ve done a couple of for some clients. So the deal sizes there can be can be much different.

    Patrick: And geography is not a problem for you.

    Domenic: Geography is not a problem, we have our own in house Business Development Group. So we insource, all of that. So we’re not, we’re not outsourcing anybody, we control all of that outbound effort on behalf of our clients. And these are people that are trained on our industry. So when they get an owner on the phone, they understand the sensitivities, they understand what the dialogue should look like. And they’re very professional, and quick about it. So we can really exercise and implement these engagements in a very time efficient manner.

    Patrick: Well, I think one of the things is important about what you’ve mentioned a couple times on this, it just shows the empathy that you and Sun Acquisitions has for for target companies, for sellers out there prospective sellers, because, you know, they’re not doing M&A every day. And you know, so they’re inexperienced, or not naive, they’re just inexperienced. And so, there can be a little bit of a intimidation factor there, as they go into this, you know, what I consider, in some cases, a life changing transaction for that. And so, there, there is some fear out there. And, you know, one of the great developments has been out here now, mergers and acquisitions was, has been the development of reps and warranties insurance. 

    Where a seller has their representations of their disclosures with their company outline in the purchase and sale agreement. And to a buyer this is standard operating procedures. These reps are there, the buyer performs diligence. But then the buyer says, well, we’ve got this thing called an indemnification clause. So in the event we miss anything in the diligence is with the seller, if we missed anything, this provision allows us to come and claw back money from you for something that you didn’t tell us about may not have known about it, but you know, that’s what it is. And that scenario, particularly for someone who’s inexperienced, and as, as these owners, and founders are, they, you know, have the situation, fall from a collaborative conversation to a confrontational, almost adversarial. Because all of a sudden, you enter a little distrust there. 

    Because, you know, on one side, the seller is like, you can’t keep me responsible for something I didn’t know about. And the buyers is saying, well, that’s true. But at the same time, you got to understand, I’m betting 10s of millions of dollars, that your memory is perfect, okay. And so you’ve got that natural tension. The beautiful thing is by ensuring a deal with reps and warranties, that indemnity obligation is transferred away from the seller, to an insurance company, buyer benefits because they got certainty that if there is a breach, and they suffer financially, they can collect from the insurance company without having to, you know, attack the seller. The seller benefits, because the attachment points on these policies is usually lower than most escrows. So less money is held back at the transaction, seller gets more cash at closing. 

    Better yet, they have peace of mind knowing that even with that additional money they have, they’re not at risk of any more clawbacks coming back so they can go ahead and exit cleanly. And we’ve just seen this just you cannot understate the tension as released, when when this is brought into the deal. And happily deals now in the lower middle market as low as 10 million to $15 million transactions are eligible for rep and warranty. It wasn’t the case pre COVID. Now it is and so the more we can get that out, the better. But you know, you don’t take my word for it. Dom, what experience have you had good, bad or indifferent with rep and warranty?

    Domenic: Yeah, not a lot. Because it like, as you pointed out, it hasn’t really been available down to the, you know, deal sizes that we’re focused on. Right. And so we’ve been learning about it over the last couple of years, we’ve presented it in a couple of situations where we thought we could bridge a gap. But now that it’s coming down market and the price points are, you know, to the point where people can, you know, it really makes a lot of sense for a 10, 15 $20 million deal. We’ll be promoting this a lot more. And I think, especially with post COVID. With all of the new deal structures that we’re starting to see, with all of the uncertainty about is the business recovering. If it’s going to recover, what’s it going to recover to? 

    And I know there are some limitations around will it cover earn outs or not and things like that, but there are all sorts of new deal structures because of COVID. And I think if we can fit reps and warranties insurance into that, even in some small way, it will go a long way to bridging bridging gaps between buyers and sellers.

    Patrick: Fantastic. Now let’s talk about M&A Unplugged. And just as one podcaster to another I’d love for you to share your story on, okay why did you decide to become a podcaster? And what types of tell us about the content and so forth? How we can find it? I mean, I will comment on one thing for my audience about M&A Unplugged. As of today in post first quarter 2021. There are over 1 million podcast series out there right now. Okay. But the average podcast series is only six episodes doesn’t go more than that. Dom as a you and I talked before you’re approaching episode number 100. So you definitely got some sustainable messaging out there. There’s some great stuff. So tell us about M&A Unplugged.

    Domenic: Yeah, you know, I didn’t set out to actually do a podcast, we were trying to figure out how we can help people that do transactions with the number one pitfall that we see, over our 20 years of experience. And over, we’ve got over 400 completed transactions under our belt. And the number one pitfall is people don’t properly prepare. Whether you’re acquiring a business and you don’t put all the pieces together, and you’re not strategic, and you don’t really figure out the finance. Like if you don’t put all those things together ahead of time, you’re bound to hit some speed bumps, and you can lose deals are not met, not meet your returns. 

    On the owner side, we see it almost 100% of the time, they haven’t properly prepared, they haven’t put their house their their personal house in order their personal financial situation order, they haven’t put their business in order. And then sometimes they’re not even emotionally ready. And so we wanted a way to help people understand what preparation looked like, whether you’re looking to buy or sell, and what goes into getting a deal done so that when they are ready for their own transaction, at least maybe we’ve played some small role in helping getting you know, helping them to get smart, so that they can maximize their returns and minimize their risks. And when we thought about how can we do this, you know, could we blog? Can we do webinars? 

    Podcasting, back we did, we launched in 2019 was already taking off, but not even like it is today. I mean, it’s exploded since I started doing it. And the more I learned about it, the more I thought, wow, this is a great way to create content that’s evergreen people can consume it, they can go back to episode number one or two or whatever, you know, episode topic may fit fit them, and they can consume it. And they can consume it at regular speed, fast speed, like you know, I just me like it was a really flexible way. And and we captured video early on. So we also knew we could put this information up on YouTube. 

    And YouTube’s become a tremendous way for people to get content. And so the more I thought about it, and the more My team and I researched it, we arrived at the conclusion that podcasting was the way to go. And our mission has been simple from day one. We just want to help people avoid the number one pitfall of not being prepared. And hopefully we do that hopefully we you know, our episodes and our content deliver on that mission.

    Patrick: I can tell yours are nice and tight. And you know, they don’t ramble on very long but very informative. But that’s what you need is you need those kind of bite sized data points and talking points to kind of get you familiar with some of these unfamiliar, which has been a boon. I think also what’s been great is just the, you know, the silver lining COVID was just the evolution of Zoom with being you know, being able to have have these meetings, and so forth, then record them and get them out. So I think that’s just a wave of the future we’re not going to go away from we will do more in person as as as the as COVID wanes. But I’ll tell you, this is a tool that we’re going to leverage quite a bit.

    Domenic: I believe that.

    Patrick: Yeah. Now as we’re getting into, you know, we’re now a good chunk into 2021. Dom, share with us your perspective, what do you see for the rest of the year? Either be it M&A in general, or Sun Acquisitions in particular or M&A Unplugged?

    Domenic: Yeah. You know, so from what we would what we can see in the M&A market at this point in time, there continue to be more buyers than sellers. The buyer market has exploded for a number of reasons. Private Equity pre COVID had raised almost $2 trillion pre COVID. And that money is earmarked for private equity go out and make acquisitions. So you had all that money that was raised pre COVID. You also have all these strategics who are out there trying to grow their businesses. And what we hear time and time, again, is that organic growth has become very hard for people. And acquisitions, if you have a healthy balance sheet has become an easy way, a much easier way than going out and spending money on R&D or starting up a new division. 

    Let’s go buy something somebody else somebody else has already built. So you’ve got all these strategics in the marketplace. And then you’ve got this third level of investor groups that have popped up people with a good amount of money, who have decided that they’re done with corporate America. They’ve had two or three people pull, you know, a couple of million dollars together, and they’re out in the marketplace, and they’re looking for acquisitions. And we’ve seen that part of the market explode. So you have all these buyers with lots of money supported by a lending environment with very low interest rates. 

    And it’s, you know, it’s a lot of fuel for acquisitions. The piece that continues to be a little bit missing in action are the owners. We have good quality businesses, but not nearly enough to meet the demand of the buyers that are out there, which is why you see multiples being you know, as high as they are in the marketplace right now. So owners who are selling are getting very good multiples for their, for their businesses. And I’m also sort of surprised that the looming tax changes, even though there isn’t a decision on them. But there’s lots of talk about capital gains taxes going up, I’ve been a little surprised that that hasn’t moved more market and more owners into the market to sell their businesses. 

    So I’m a little uncertain at this point in time as to where the sellers are going to shake out. I’m still hopeful that before the end of the year, we’re going to see a flood of owners decide that 2021 is the year to get out. They’ve recovered from COVID. And all the buyers are still there to you know, to make those acquisitions. So I think it’s still going to be a very strong year. I think it’s going to be stronger in the second half than it has been in the first half.

    Patrick: Yeah, well, I’m stealing from a prior guest. But one of the things that, you know, people overlooked with COVID was, you had all that dry powder. But not only that, you know, time didn’t stop. And so the people that were thinking of an expert that are getting a little bit older, those owners and founders, they’re not getting any younger that time has come on. So I have a feeling that there’s going to be you know, not a surge, but you’re going to see quite a bit more movement. I think as as everybody kind of gets back to work. 

    I think there are a lot of owners that, you know, they want to dig out of the whatever lag they have from COVID and get back on their feet, because they don’t want the earnouts they want to go ahead and see if they can build up a bit. Yeah, and you know, more power to them. But I think as as you and I both agree that it probably you know, the in the foreseeable future M&A activities, definitely not going to be going away.

    Domenic: Yeah. Yeah. No, I think it’s, I think next couple of years, as long as interest rates stay relatively low and the capital markets remain open. It’s it’s going to be a robust M&A market.

    Patrick: I mean, just look at look at a SPACs are out there. And that’s on the high end, and they’re doing 100 million dollar deals. Hundreds of those from out of nowhere. So there’s a very diverse community out there for for everybody. There’s enough for everybody, which is, which is a nice way to view life I guess.

    Domenic: Absolutely.

    Patrick: Dom this has been fantastic. How can our audience members find you either with M&A Unplugged as well as Sun Acquisitions?

    Domenic: Yeah, so M&A Unplugged is on all the major podcast platforms. We also post the episodes on our websites sunacquisitions.com. And you can always reach me directly at my email, which is drinaldi. drinaldi@sunacquisitions.com. And Patrick, thank you so much, and kudos to you too, with your show. You’re also up there in the top shows in 2021 for M&A. So it’s a pleasure to do a show with a fellow M&A compadre.

    Patrick: I totally appreciate it. I was thrilled. I didn’t even realize that there was a list out there. And then when I saw it, I was like, you know, I didn’t care if it was a 15 way tie for tenth. I didn’t care. The fact we got on the list. I was thrilled. But it was it was nice, because this is a great way to meet you. And I wish you all the success and let’s keep talking. Okay.

    Domenic: All right, Patrick. Thank you.

    Patrick: Thank you.

  • Todd Dauphinais | The Key to Setting Your Firm Apart
    POSTED 6.1.21 M&A Masters Podcast

    On this week’s episode of the M&A Masters Podcast, we sit down with Todd Dauphinais, Founding Principal and Managing Partner of Clavis Capital Partners in Dallas. Clavis Capital Partners realized that there was a better model and approach to private equity, and set out to create an investment firm focused on operations, the longer term, and on deploying capital in the most flexible and effective manner possible – the independent sponsor model. 

    We chat with Todd about what inspired him to build Clavis, and where the name Clavis even came from, as well as:

    • The successful effects of the independent sponsor model
    • The importance of strategy for growing businesses 
    • Building a company culture that sets you apart
    • How the rapid advancement of technology can be used for market benefit
    • Rep and warranty policies 
    • And more 

    Listen now…

    MENTIONED IN THIS EPISODE:

    TRANSCRIPT:

    Patrick Stroth: Hello there, I’m Patrick Stroth, President of Rubicon M&A Insurance Services. Welcome to M&A Masters where I speak with the leading experts in mergers and acquisitions. And we’re all about one thing here. That’s a clean exit for owners, founders and their investors. Today I’m joined by Todd Dauphinais, Founding Principal and Managing Partner of Clavis Capital Partners. Based in Dallas, Clavis Capital Partners recognized that there was a better model and approach to private equity, and set out to build a different kind of investment firm. One that was more focused on the operations, on the longer term, and on deploying capital in the most flexible and effective manner possible. And that model would be the independent sponsor model. So, Todd, it’s going to be great to talk to you about this. I’m very excited. Thanks for joining me today.

    Todd Dauphinais: Yeah, thanks, Patrick. I really appreciate it. Thanks for having me on today.

    Patrick: Yeah, before we get into Clavis Capital Partners, let’s give our audience a little bit of context for you. How did you get to this point in your career?

    Todd: Oh, it’s a great question. Thanks for asking that, Patrick. So I started Clavis, eight years ago, I was 43 years old at the time. Up until that point, in my career, I’d spent most of my career in operations, I had been the CEO of a midsize manufacturing firm for a number of years, I had done the kind of the big corporate thing I’d worked for Schneider Electric, which is a European based industrial company. I ran a number of their business units in their M&A team for a while. And I started out my career at Deloitte Consulting, doing strategy and operations consulting. And you know, as I look back, all of that experience, that operations and strategy and even the consulting experience really, is beneficial to what I do today. 

    And when I started Clavis, eight years ago, I like most things, you know, I was looking for, I wanted to take my operational experience and apply it to more more of an investing type model I talked to, and frankly, when I was interviewing with a number of PE firms, and I was looking for that firm that had more than operational background, and then operational bent that that had that was similar to my background. And I really, I couldn’t find it, I mean, I kept running into the same type of person over and over again. And in groups that were really, the backgrounds were much more financial services, financial engineering, investment banking backgrounds. And so you know, I remember the time actually, I was I was at the office of a good friend of mine, and was bemoaning the fact that I couldn’t quite find the job that I was looking for. 

    And he’s the one that finally kind of said, well, then go create it yourself. And so I guess the short story is, I couldn’t find the job that I was looking for. So I had to, I had to invent it. Unfortunately, it didn’t pay well at the time. But, you know, I really had a vision at the time to start a group that was staffed by and lead by operational and strategic people, and really had a vision at that time to create this, and it takes a lot longer than you ever think it will. But, you know, fast forward now our team is all operating and strategic professionals. And you know, we’ve been successful thus far. So I guess it worked out. But in the early days, you never know if that’s if that’s gonna work or not.

    Patrick: Yeah, I was. That is what happens when you get to be our age, and you blink, and all of a sudden five years goes by so you slog it through and blink, and you know, it all be behind you. So that’ll be great. Yeah, that brings it Yeah. And that brings us to Clavis Capital. And obviously, you didn’t name name, the organization Dauphinais Capital, because yeah, you’re more creativity than us insurance, folks and the lawyers out there. So give us a story. Because that’s nice insight into the culture of the firm. You know, how did you come up with the name Clavis Capital?

    Todd: Yeah, no it is a it is a good. It’s a funny story. Um, so the story is that we had rented a house in Sun Valley, Idaho many years ago, my wife was seven and a half months pregnant, and I had a two and a half year old. And on a Sunday night, I took my family out to dinner and came back to the house and this was before Airbnb, and before any of that. I’d rented it from a friend of mine who had a rental service and, and as I get back on Sunday night, I realize I’ve locked myself out of the house. It is, it is locked up tight as a drum and I tried to find a way in the house, I can’t get in the house, and it’s later it’s getting late on Sunday. 

    And I was standing on the back porch, and I’m kind of looking down and just really ticked off at myself for doing this because I couldn’t blame anyone, I couldn’t blame my two and a half year old. And as I’m looking down, I happen to glance over in a flowerbed and in the flowerbed it, I picked up a glint of a metallic object in there. And so I reached down and lo and behold, there’s a key, it’s the, it’s the backup key, and it had been there for a long time. And so and it got us in the house. And and that key is always been significant to me. And there’s a lot you could, you know, there’s all kinds of different things, you could you could read into that, but I kept that key. 

    And so when I started my firm, I wanted to, I wanted to do something that that that involve that key. Well, clavis is Latin for key. Yeah. And, you know, everything key was not only generic, but all of the URLs were taken. And so I had to go to Latin to find, to find an available URL and something like that, that sort of sounded neat. And so that’s that really is the the story behind the name. And it, it really like you mentioned, it, it, it’s part of our culture, and it’s in culture is a big thing for us both in our firm, my firm and, and the companies we invest in, we pay a lot of attention to culture. And so that’s a, that’s a cool little story that we can tell to people, it has some meaning and it obviously, is very meaningful to us.

    Patrick: Yeah, I think that’s fantastic. And there’s a key is iconic for a lot of different different areas, and so forth. And you talk about culture, and there are a lot of people that they pay lip service to culture, but it is a real strength is something you got to focus on, particularly for the type of organization you are, because let’s face it, in the investment world, right now, you’ve got over 4000 private equity firms out there, and more coming every time. Add to that family offices. And then, you know, there are 1000s, I don’t know, it’s very fragmented the sector, but you’ve got independent sponsorship sponsors out there, too. 

    And you have to distinguish yourself from all the others out there. And and culture is a great way because it comes from the heart, you can’t fake it. And so, you know, you and I talked earlier, you mentioned that you made, you know, your website is as you recognize as a better model out there, but you intentionally went the independent sponsor route, and you’ve not outgrown into a fund. So let’s talk about that as a model, what it does for you what it enables you to do for your investments, and how that’s been successful.

    Todd: Yeah, in your right to bring up there, there’s a lot of there’s a lot of competition in this market. And it’s, it is really difficult to, certainly to differentiate yourself or to get that message out. And, and to get people to understand that the and there’s no barrier to entry to being an independent sponsor. That’s the thing that’s most frustrating to me in a lot of ways is there’s there’s no you know, anybody can hang their shingle up and, and just call themselves that, that term. And so I even struggle with a little bit of the what to call ourselves, we don’t call ourselves generally, PE, because we’re not a fund, nor do I have any interest whatsoever in raising a fund. And there’s some specific reasons for that. But what I do for a living, what really gets me jazzed in what gets me out of bed in the morning is not deploying capital, per se, it’s building businesses. 

    That’s where the operational background comes in. What me and the other members of my team are really good at and really, really like, is building businesses. And so the second you raise institutional fund, you are now in the asset deployment business. And your job now is to get that that those dollars out the door, the people who do that for a living, they’re great people, and they they have a lot of fun doing what they’re doing. But they spend their day differently than how I spend my day. I spend my day really working on with our leadership teams and our portfolio companies developing long term strategy, developing, you know, the the plans and the operational plans to really grow those businesses. 

    And so we spend a lot more of our time doing those operational and strategic things. If I have a fun, that’s not what I get to do on a day to day basis. I’m managing LPs. I’m raising money on deploying that capital and it causes you to do some things that you might not want to do. There are pros and cons to both models, no doubt but what gets me really excited is being able to spend dedicated time on our portfolio companies and working with the leadership teams, and sort of being that that right hand person to the CEO of our portfolio companies. So I get, I get the best job really, in my opinion, I have the best job in the world and get to be sort of Kwazii CEO and strategy guy. But without the day to day headaches that I used to have when I was running my own my own company.

    Patrick: You summarize that really well, where you say, look, the day you open up a fund, you become, you know, you move away from what you love doing, which is being company builder, and you go from company builder, to financial engineer, nothing wrong, but there are some people that love the engineering, there are other people that really love rolling up their sleeves. And, and doing that, I would think that would appeal to owners and founders looking at, you know, they’re at an inflection point, they want to move to the next level. And, you know, they want somebody who’s going to actually be with them side by side, and, and work with them. And I think under this model, there’s no dilution of your attention.

    Todd: Yeah, that’s right. And it does, it appeals to the person who is really looking for a partner, not just looking to sell their business to the highest bidder. And there are both types out there, and they’re there, they’re fine. But we are very selective in the types of things that we get involved in for a number of reasons. Number one, we can’t do a whole lot of deals, at the same time, we can only concentrate on so many deals. And that’s really how I want it. I mean, that allows me to get deeply involved in my team to get deeply involved in each individual deal. We also can’t afford to get any one of them wrong. In a fund structure, you know, you may invest in 10, 15 companies in a fund and you know that two or three or four of them are just not gonna go well, they’re gonna go bad, I can’t afford that I every single deal that we get involved in is its own deal. 

    And, and so I can’t afford to get it wrong. So we spend a lot of time really evaluating our opportunities. And that’s where you mentioned earlier culture, that’s where culture comes into this. And it’s not just lip service, because the you can tell a lot about how successful and investments going to be based on the company culture that the leadership of that company has built. And if you go into a place and they’ve got really great culture, you can feel it, it’s it’s not something that’s easy to see, necessarily, but you can feel it, those investments will do nine times out of 10 or 10 times out of 10, those those investments are going to do just fine because they’ve been built right from the ground up. Because the the leadership have focused on building that culture.

    Patrick: I’m curious when you talk about culture now. I mean, it’s one of those you can see it or you can feel it immediately. It doesn’t have to be translated, I mean. Is it that easy? Did you are you able to tune to recognize that real quick? 

    Todd: Yeah, we’ve gotten better at it. But yeah, you you can tell, you can tell. And there’s a couple things that are that are a little bit telltale, when you when you go to even before you go visit, you can usually get some sense of the culture. It’s amazing, you know, just what you can tell by going out to the internet and seeing, you know, how does the website present and what’s you know, what, what is that? Does that talk about culture? You know, we’ve we’ve seen, we’ve, we’ve gotten really intrigued with some companies where there were YouTube videos that the CEO had put out there that talked about culture, you know, if you can, a lot of times even before going out there, you can tell a little bit. 

    Then definitely when you go out on site, and you meet with the leadership team, and you meet with the management, how they talk, how they talk about their company, you can always tell what’s the level of pride in the company, both how they talk, how does the how does the business present. If you walk around the plant, in our case, we do a lot of manufacturing stuff and the plants really clean and people are wearing the logo and stuff that tells you a lot about the pride of the people that the people have in the firm and the culture that they have. If you go there and nobody talks about the employees and it’s a dark and you know really, really

    Patrick: Gritty.

    Todd: Gritty place. Usually that kind of tells you a little bit as well. So it’s more art than science. But if you’ve got a little bit of a trained eye to it and you’re looking if you’re looking for it you can you can see.

    Patrick: Yeah, why now and we know not to focus on numbers or anything but you’re usually going from majority interest and then you prefer having the the owner founder remain with you or are how many others deals happen where the owner just wants an exit?

    Todd: You know, in in every case that we’ve actually done the deal, the owner has stayed with the business. But having said that, because of our operational background, it doesn’t scare us to have situations where an owner might be looking for an for an exit, not only a financial exit, but but you know, he’s looking to retire or to step back or whatever. I tell owners all the time, I’d rather know what your intentions are, I can work around those. And we’ve had a situation we’ve had two situations in our portfolio where the owner wanted to stick around for a transition period a year or two. 

    And they wanted to retire. And, and we were fine with that. And, and we, in both cases, honored that that wish and worked with the owner to find the right leader for that business after the owner stepped away. And we’re not scared of that at all. But in most cases, we’re looking for somebody who’s looking for a partner. And if if they’re looking for a partner, then they’re usually not looking to just sell 100% and go sit on the beach, because that’s, that’s, that that doesn’t work with our model very well.

    Patrick: Gotcha. And, and your focus is on the industrial sector, which before I started this podcast, being quite admittedly, based in Silicon Valley, our view of manufacturing is pretty much limited to the tech sector sector, where you’ve got clean rooms and all these spotless, little germ free environments and everything. And, you know, you’re in that nice, gritty, you know, sector there where the where the real work happens. And I’m surprised to see how, you know, manufacturing and industrials are actually thriving right now. So, you know, you gotta share with me, why did you pick that sector? Is it just your background? Or, you know, other reasons? 

    Todd: Yeah, it’s it’s, a lot of it came from my background to start with, it’s something that I know a little bit about having having run manufacturing businesses before. So I, you know, I was trained in LEAN manufacturing, and six sigma, all of those fancy words that came out of the 80s, 90s and 2000s. But really, our focus is in industrial and manufacturing, not as much because we know something about it. But we really believe in that sector. And in particular, the Renaissance that we believe is, is kind of happening in this country in manufacturing, some people call it manufacturing 4.0, or whatever you want to call it. But we have a specific thesis about what is going on in manufacturing. And what we’re seeing in the reshoring of manufacturing back to the US the kind of undoing of what happened over the last 30 years, when manufacturing, when supply chains got very disaggregated and and placed globally. 

    And that worked for a long time. What we’re seeing now is the market has evolved such that speed to market, rapid prototyping, mass customization, all of these things that are now trends in the market. And it really starts with the consumer, the consumer has gotten really used to having something delivered custom made instantaneously to their door, you can’t do that if you’re manufacturing everything in China. So we and then throw on top of that the world has just gotten a lot more complex and complicated. And you throw in, you know, trade wars and things like that. China, Asia in particular has gotten a lot less interesting and a lot less advantageous. It’s a lot that China has gotten more costly over the last decade or two. And so we’re seeing a lot of people come back reshoring but the manufacturing that is coming back is looks a lot different than the manufacturing they left. 

    And this is where it looks a lot more like your Silicon Valley and your tech oriented businesses then it certainly did in the you know, industrial age when you were talking big plants and and a lot of people there’s a lot of technology now involved in producing goods and prototyping goods and speed the market. There’s a lot more high tech stuff that is is is being invested in and put into ground here in the United States. And so even though, you know, our orientation is manufacturing and industrial, that doesn’t mean that we don’t pay a lot of attention to the technology and the the very rapid advancement of technology that’s occurring in our space. And, and that’s really where we like to invest. We’re looking to invest in more tech enabled manufacturing, and you’re seeing that across the board, it’s it’s really an exciting place to be right now.

    Patrick: Now with and with your, your targets, your investments, you’re usually the first institutional capital coming.

    Todd: Yep.

    Patrick: Okay. So a unique aspects to what you’re doing as an independent sponsor, you had mentioned, you can’t get these these deals wrong, you don’t have that margin for error as you’re going forward. And in mergers and acquisitions, there are a couple things that happen, you touched on with culture is, you know, you cannot remove the human element. This isn’t, you know, Company A and Company B, you know, coming together. This is one group of people agreeing to partner with another group of people. And so, you know, you’ve got that human element. And a lot of times what happens, and I imagine this happens every time in your case is that you have, you’re on one side of the table and you’re an experienced buyer, and your counterparty, the seller is inexperienced. 

    It’s not that they’re naive, they just don’t do this all the time. As they go through the process, you know, particularly when you’re going through diligence, which you’ve got to be thorough, because you can’t afford to miss. They’re not used to that. And then following that process, okay, they come through the diligence, then you sit down, you’re, you know, bringing out the purchase and sale agreement. And then there’s this indemnification clause, and what the seller hears who’s not experienced when when their lawyers reading the indemnification clause, they hear buyer saying to them, okay, I know we just went through this invasive diligence process, but just in case we the buyer missed anything. And that miss leaves us suffering financially, we’re gonna hold you to pay us for any losses we have. It’s just, you know, if we couldn’t find something, we don’t want to be out of pocket with a lemon. So, you know, that’s just part of the business is standard procedure will have an escrow and you’re all set, probably nothing’s there. 

    So don’t worry about it. And for seller that’s not used to hearing that they their response is. Wait a minute, I told you everything. You can’t hold me responsible for something I didn’t know about. Experienced buyers as well, yeah, but I’m making a bet of 10s of millions of dollars, that your memory is perfect. This, this happens in all the deals, it’s just part of the process. And right there, you’ve taken a collaborative situation, and all sudden, there’s this potential for distrust to come in stress, fear of the unknown. And, you know, it’s a real challenging thing, and sometimes derails deals. And the tragedy is that that whole process can can be avoided. And the way that happens is now the insurance industry in the last several years came through with an insurance policy, it’s called reps and warranties, it essentially takes the reps that the seller outlined, that the buyer vetted with due diligence, and the insurance industry simply says like, buyer, if if there’s a breach of at least a financial loss, come to us don’t go to the seller come to us. 

    Buyer has certainty of collection, they avoid the very, you know, tentious part of probably having to clawback money from the seller. And so they’re taking care of. Seller gets a clean exit. A policy attachment point is lower than most escrows. So they don’t have as much money held back in escrow. So they have more cash at closing. Better yet, they get peace of mind. Because if there is a loss, you know, they don’t have to pay it, they’re not going to lose any of their money. And so it just seems to smooth the process over. And the beautiful thing for us is in concept, this was great. But in practice, it wasn’t very useful because rep and warranty was reserved for deals at $100 million transaction value and up. They had very strict eligibility standards. You had to have audited financials, a battery of third party diligence reports and everything. And so it just wasn’t feasible for the smaller deals. 

    Competition has come into the insurance market since the pandemic. And now eligibility for rep and warranty has now fallen to deals as low as 10 to $12 million. And you don’t need audited financials now to qualify. And so that’s the purpose of our conversation with a lot of people out there is to make them aware that this thing that used to not be available is now available for the lower middle market where I really believe it makes a huge impact. Because if you can save somebody a million bucks or 2 million that’s that’s huge. You know, but don’t take my word for it, you know, Todd good, bad or indifferent. What experience have you had with rep and warranty?

    Todd: Yeah, now you it’s a great point, Patrick. The biggest thing for me is it removes a potentially contentious item out of the process at a critical time in the in the process. And you described it well that you know, you get through a due diligence process and now you got this. This this additional thing and to a to a seller who doesn’t do this for living, you know, that feels very bad faith. Yeah, bad faith or whatever. And so the rep and warranty product, kind of smooths that over quite a bit. And, and so we have utilized rep and warranty insurance in pretty much every deal that we’ve done for the last two, maybe three years, I believe. 

    And it does, it does smooth that over. The statistics I’ve seen is it’s that that part of the insurance market has really exploded because it’s for exactly the reason it’s, it’s good for all, you know, both parties involved in the process. And as an M&A professional, I want as little friction in the processes as I can get. And that’s that’s, that’s great. It’s gonna be interesting to me to see, I’ve seen a lot of statistics about the the implementation of rep and warranty policies. I haven’t seen a lot of statistics around the claims against those policies, and how often those policies or those claims get, get paid out. 

    Luckily, we haven’t had any any issues with with with any of our policies and you know, knock on wood, hopefully that is that that remains, that remains the case, that’s not something I want to be an expert in. So it’s a great product, it’s something that just makes the deal process work a lot better on our part. And, you know, I think it’s, it’s something that has been a real boon, actually, to the to the to the insurance carriers who develop this, and it’s become a lot more competitive. In the early days, there were two carriers that were that were that were that had 90% of the market. Now, you got a lot of other options there, which is good for competition.

    Patrick: Yeah, I think it helps because the more carriers are out there, there’s just more variety, where a couple carriers will will specifically target an industry or transaction size, and treat it more favorably, they’re just more familiar, they’re more comfortable with it. And then I would say on the claims side, so far, we haven’t heard anything industry wide reports are coming on, you know what the impact of COVID has been on rep and warranty policies. By and large, though, less than, you know, 10% of the policies out there, maybe 15 to 20% of the policies incur a breach reported, hasn’t been paid, but they just notify the carrier that actually paying this is very small as a very profitable line of coverage. 

    Even with consultation, we only they will see that because the demand is getting bigger, I would just say for 2021, we could probably see insurance carriers, maybe raising their retentions a little and maybe bringing the pricing up just by a little like a point or two, just because the demand is so high. Not because of losses. Which is a nice signal that is going to be sustainable. So we’re very, very happy with that. And now we’re able to do not only platform deals, but add ons. And so I think that’s just the more out there that we can be available, the better the better for everybody. Todd with, you know, where we are right now with, hopefully we’re at the beginning of the end of the pandemic. Now, as we move forward, and people are beginning to move out and get out and do site visits and everything like that. What trends do you see for the rest of the year into 2022? Either industrial, Clavis Capital? What do you see out there?

    Todd: Yeah, the market is is extremely competitive, and I think will remain so. There’s so much capital that’s out there, chasing deals, you know, in a lot of ways, COVID took a lot of what would otherwise be transactable companies off the market for whatever, you know, people were busy dealing with, with COVID related things, certainly industries that were heavily impacted. But it didn’t change the amount of capital chasing those deals. And so we’re seeing all kinds of just perverse behavior in the market, we’re seeing people that have come that traditionally would be more upper middle to large cap buyers come in to come down into the middle market, and even in the lower middle market space, it’s gotten a lot more competitive. 

    And I don’t see that changing. I really don’t the I think that’s going to be with us for a long period of time. The debt markets still remain very, very liquid. And so I you know, I and I don’t see a big correction to that coming anytime soon. So it’s gonna, it’s going to remain very difficult. It’s going to remain a seller’s market. And, you know, I think that’s going to be with us for quite some time. I think the industrial space will continue to be a good space to be in, but I think, you know, a lot of spaces are going to be good spaces to be in.

    Patrick: Yeah, don’t see any shrinkage in the industrial sector, particularly with logistics. So many people don’t realize how to get a good, you know, product from point A to point Point B. And as you said, that’s evolving as we speak now. And there’s plenty of room out there for that kind of stuff.

    Todd: Yeah, absolutely.

    Patrick: Do you think, one of the things I wanted to ask you. Do you think because of COVID, there are a number of companies that may have been out on the market and they they, you know, pull their pulled their chips off the table, they pulled their horns in, and then weathered the storm. And they may want to wait to get 12 months of performance post pandemic, on the books to kind of show where they are to improve their status before they go back out?

    Todd: Yeah, absolutely. We’re, what we’re seeing, and also hearing anecdotally in the market is that the second and third quarter of this year, you know, we talked to a lot of financial advisors and investment bankers and people that represent sellers. And what they’re telling us is towards the end of q2, and into q3 this year, there’s going to be a lot that comes on the market, because you’re going to have gotten that q1 and q2, really q2 of 2020, off the off the trailing 12. And I think that that will continue into q3, and q4 and even into 2022. And so I think you’re gonna see a lot of that, as people have recovered, that you’re gonna just see. 

    And you know, if you think about it, if you have a, a business owner, that’s call it, that’s in their, in their late 50s, early 60s, they’ve now been through three major financial disruptions in their, in their career between, you know, this, and 2008. And even even going back to bite off. At some point people go, you know, what, I don’t want to go through another one of those major disruptions and so and you’ve got baby boomers that are retiring, and the transfer of wealth, the generational wealth transfer, a lot of those in family owned companies is going to happen. It’s just going to the next, I think through the remainder of my career, honestly, is going to remain a heightened amount of activity, both on the on the supply of deals and on the demand for deals out there.

    Patrick: Man I hope you’re right. I really hope you’re right. Todd Dauhpinais with Clavis Capital, really appreciate having you here today. How can our audience members find you?

    Todd: Yeah, um, so a couple different ways. Our website is, is claviscp.com. So www.claviscp c l a v i s. C as in Charlie P is in partners.com. And then on there is all of our contact information, my phone number, my cell number is on there and email address. So that’s probably the easiest way to get us. And we would love to hear from anybody out there that certainly that that is looking to transact. But even somebody that’s looking for, you know, some advice and counsel on what to do we take those phone calls as well.

    Patrick: I think I think that’s a great value to people out there is, you know, there may not be a deal happening right tomorrow. But, you know, having those initial conversations goes a long way. So I really do appreciate you offering that out to the community. Todd Dauphinais, thank you very much. Really appreciate you. We’re going to talk again soon.

    Todd: That sounds good. Thanks, Patrick. Appreciate it.

  • Why Representations and Warranty Insurance Is the Perfect Tool for Bankruptcy Sales
    POSTED 9.29.20 M&A

    I know of a company that was on the verge of being bought for $100M. Then COVID-19 came in, the deal fell through, and now the business, forced to go through bankruptcy, is selling its assets for $20M.

    This will not be a unique case. In the coming weeks and months, expect a growing list of companies looking at bankruptcy as their way out due to the ongoing economic effects from the pandemic.

    Unlike past downturn-related bankruptcy sales, there is a very valuable M&A tool that can be brought into the transaction that greatly benefits both Buyers and Sellers (also known in these cases as debtors):

    Representations and Warranty insurance.
    As Bryan O’Keefe, Gena Usenheimer, and James Sowka, partners at Seyfarth Shaw, put it in their recent article, “How An M&A Tool Can Benefit Bankruptcy Sales”:

    “When properly utilized, reps and warranties insurance can increase the value of the distressed asset while simultaneously providing the asset purchaser with a backstop on the promises made in the purchase agreement.”

    R&W coverage transfers the indemnity risk away from the Seller to a third party – the insurer. And the Buyer simply goes to the insurer with a claim for damages from any breaches post-closing. It’s a win-win for both sides of the transaction.

    In bankruptcy deals covered by R&W insurance, the Seller’s company and/or its assets are more valuable, which gives them more cash to cover their debts. The simple reason why is that an asset backed up by an insurance company is more valuable to a Buyer than an asset that is bought as is. They can sell for more, simply put.

    For Buyers, this coverage gives them protection and peace of mind that if something goes south and there are unknown breaches of the reps and warranties of the Purchase and Sale Agreement, they won’t have to go after the debtor (which doesn’t have funds to cover the damages because of their financial situation) for relief because the insurance company is ready to go.

    This is vastly different than how business is usually done with these 363 sales. In the past, the mode was “as is, where is.”

    It’s kind of the like buying a used car “as is”—it’s up to the purchaser to have a mechanic check out the vehicle to make sure it’s in good running order and there are no hidden issues. When a car warranty is added to the deal, not only does it cover repairs if something breaks down unexpectedly, but the owner can also actually increase the selling price.

    With a 363 sale, the burden of conducting due diligence of the target asset is on the Buyer, and they often have a shortened timeline to conduct it. Things can be overlooked. R&W coverage acts like the car warranty.
    As Bryan, James, and Gena say in their article:

    “Most 363 sales are ‘as is, where is’ – a bankruptcy term of art meaning that the asset purchase agreement has no indemnities and the debtor is not standing behind the usually limited reps and warranties contained in the agreement.”

    “While the bankruptcy court’s 363 sale order wipes out third-party claims against the assets, it does nothing for so-called ‘first party claims’ – that is, the reps and warranties made between the debtor and buyer around the overall state of the assets.”

    R&W coverage is more affordable than ever. It causes no friction or change in dynamics in the deal; in fact, it makes negotiations smoother. And it’s now available for middle market companies. This has meant its widespread adoption in some M&A circles.

    PE firms have been on board with R&W insurance for several years now. And SPACs are warming up to R&W as well. Now it’s time for bankruptcy sales to join in.

    Why haven’t bankruptcy attorneys already been using this unique insurance product? They simply were not familiar with it.

    You should know that insurance companies have departments that specialize in R&W coverage exclusively for 363 sales, which means not only are they experts in the field but also are coming in with aggressive pricing for the policy, which is a relief of companies in trouble, who face higher legal and other fees in general.

    As bankruptcy attorneys realize these and all the other benefits of R&W coverage, watch for its use to increase as the coming wave of bankruptcies crests in the near future.

    To find out how this specialized type of insurance can be a game-changer in your 363 sale or more straightforward deal, contact me, Patrick Stroth, at pstroth@rubiconins.com for all the details.

  • Why Rep and Warranty Insurance Is Perfect for SPACs
    POSTED 9.15.20 Insurance

    The special purpose acquisition company (SPAC), sometimes called a “blank check company,” is the newest darling of the stock market for going public because it’s so much easier, quicker, and cheaper than a regulation-heavy traditional IPO.

    As you know, SPACs are created for the sole purpose of acquiring or merging with an existing company. And there is no deal more perfectly suited for Representations and Warranty (R&W) insurance than one involving a SPAC.

    Private Equity took years to embrace R&W coverage, which transfers the indemnity risk away from the Seller to a third party – the insurer. It’s just a matter of time before SPACs do the same.

    SPACs have been in the news lately.

    Oakland A’s executive vice president (and former general manager) Billy Beane of Moneyball fame partnered at the end of January with RedBird Capital Partners to form RedBall Acquisition, a SPAC set up to the acquire a pro sports team. Hedge fund leader Bill Ackman raised $4 billion for his SPAC, the largest listing to date. All told, SPAC listings have raised just about $40 billion so far in 2020, eclipsing the $13.2 billion raised in 2019, according to SPAC Research.

    PE firms and big-name investment banks like Goldman Sachs are getting in on the action.

    Partly driving this trend is the pandemic. The valuations of private companies are falling, and they’re looking for liquidity fast – which is something traditional IPOs definitely don’t offer, especially in this time of market volatility. SPAC IPOs aren’t as dependent on market performance to be successful. Finally, they also allow sponsors to acquire quality companies at lower valuations.

    All this means opportunity for savvy investors, who enjoy the many benefits a blank check company provides:

    1. It’s safe. Money raised for a SPAC during the IPO sits in a trust until there is an acquisition. You don’t lose money if the deal doesn’t go through.
    2. In two to three years, investors can potentially see a sizeable return. You could put the money with a PE Firm, but that capital is committed for seven to 10 years.
    3. They can walk away. Founders of SPACs must make an acquisition within two years. They must convince investors to back the deal. If an investor isn’t happy – they can take their money and walk.
    4. Less than 10% of SPACs fail to complete an acquisition.
    5. The value of the acquisition sometimes brings the stock price well above the usual starting price of $10/share. And sponsors and shareholders have a vested interest in increasing value.

    Sellers love SPACs because they regularly outbid other offers to get these acquisitions and they are under time pressure. SPACs consistently pay more than everybody else. PE firms can’t match these premiums because they want to get the best return on investment.

    Why R&W Insurance Is Perfect for SPACs

    SPAC founders are under tremendous time pressure to get deals done within the two-year deadline, which, except under very specific circumstances, is set in stone.

    They need deals to go smoothly and on schedule. Plus, the longer it takes SPACs to complete a business combination – the more leverage the target has to insist on narrow Reps and Warranties and other Seller-favorable terms.

    That’s where R&W insurance comes in. It hedges risk for both Buyer and Seller and is built to facilitate fast acquisitions. Here’s why:

    1. It transfers risk of breaches of the Seller reps and warranties to the insurance company.
    2. It provides a hedge to Buyers. The board of directors of the SPAC and shareholders are protected if a post-closing breach occurs. They won’t be subject to covering that loss.
    3. When this coverage is made part of the deal early on, there is no need for the sometimes contentious negotiations over reps and warranties because, if there is a breach, the insurer pays the damages.

      This speeds up the process – not to mention saves on legal fees, about 20% savings on the negotiations part of the deal. The management team of the acquisition target will likely work with the SPAC going forward, so if negotiations are amicable, it means a good working relationship going forward.

    4. The target company keeps more money in their pocket rather than in escrow. You can’t understand how big a deal the removal of escrow is. A typical SPAC purchase is $200M to $1B, which means typical escrows are from $20M on the low side to $100M. If you can relieve tens of millions of those dollars because R&W is in place, it’s a no-brainer.
    5. Sometimes due diligence by the SPAC team is not as thorough because they are trying to save time and money. R&W underwriters could point out things they could diligence a bit more. They could uncover soft spots in diligence that should be addressed.
    6. Provided this approach is used at the opening of negotiations, the target company will gladly pay for R&W coverage. The SPAC doesn’t incur any premium cost, which can run $500K to a couple of million. A target will gladly pay that to have $2M in escrow instead of $30M.
    7. R&W insurance is also another hedge for Directors and Officers Liability insurance. Say a SPAC has a two-year D&O policy with a six-year tail. If R&W coverage is in place, those D&O Underwriters are open to shrinking that tail premium because there is less exposure.
    8. R&W coverage is another way to persuade possibly uncomfortable shareholders. This is not usually an issue. But it’s one more argument in your favor to get it done.

    SPAC sponsors are incentivized to make deals work, because if they have to give money back to investors, they don’t get paid and could lose standing in the eyes of potential future investors in other SPACs.

    With SPACs there is no history of performance. Investors look at the sponsors’ reputation and expertise when they decide to buy shares, as do target companies when they decide to accept offers. A tarnished reputation makes it hard to move forward.

    If deals are eight times more likely to close with R&W coverage in the PE market, I would believe it’s at least that much in the SPAC market.

    Given all this, why aren’t SPACs running to R&W insurance right now?

    Until recently, most sponsors have been big-time banks and successful investors and executives. They have experience in M&A, of course, but as Strategics they held so much leverage over their targets, R&W wasn’t necessary. So they never really considered it – or even knew what it was.

    Today, large PE firms, who have embraced R&W insurance, are coming to the forefront as SPAC sponsors. R&W is definitely in their “toolbox”.

    It’s clear that Representations and Warranty insurance is ideal for SPACs. To find out how this specialized type of insurance can change the game for you, whether you’re a SPAC sponsor or a target company, contact me, Patrick Stroth, at pstroth@rubiconins.com for all the details.

  • Case Study: Rep and Warranty Insurance Helps Smooth M&A Deal in the Tech Sector
    POSTED 11.5.19 M&A

    When lower middle market PE fund Broadtree Partners expressed an interest in acquiring the small HR software solutions provider RedCAT Systems (which works with Uber, LinkedIn, and NYSE, among many other major firms), it looked like everything was going smoothly.

    RedCAT’s management team and founders felt that Broadtree’s post-closing plans for the company meshed well with their core values of not growing too quickly in order to best serve existing customers, which have complex needs, especially with benefits for well-compensated workforces.

    Broadtree was enthusiastic about RedCAT’s impressive customer base and how they had filled a hole in the marketplace with a unique and vital service. They felt, with their management resources and capital and the RedCAT team’s contacts and experience, that they could take the company to the next level – with smart growth.

    The sticking point: one of RedCAT’s partners felt that Representations and Warranty (R&W) insurance should be part of the deal.

    This specialized type of coverage, created especially for M&A deals, transfers all the risk, including the indemnity obligation, to a third party – the insurer.

    It eliminates the need for money to held back in escrow and for an indemnification clause – which makes the Seller happy. This is why the partner wanted the coverage: to make sure his proceeds from the sale were safe and not held back. They had previous experience with lawsuits from a corporate perspective and saw this as a potential area of risk.

    But there are benefits for the Buyer, too. If there are any breaches to the Seller’s reps, the Buyer can file a claim and is quickly compensated with no hassle by the insurer.

    Deals with a transaction value as low as $15M will be considered by insurance company Underwriters for R&W policies. With a transaction value under $25M, the deal with RedCAT certainly qualified. But this is a development within the last year or so, which is one of the reasons why the Buyer was somewhat reluctant, at least at first, to make this accommodation to the Seller.

    Another new development is that deals under $20M can be insured by R&W coverage for up to 75% to 100% of the transaction value. In the case of RedCAT, the parties were seeking a policy covering up to 75% of the transaction value. For larger deals, unlike this new lower middle market segment, Underwriters are only comfortable going up to 30%.

    How R&W Insurance Changed the Deal for the Better

    For Broadtree Director and Portfolio Company CEO Rob Joyce, this was the first time he had taken R&W insurance all the way to the finish line. So they were familiar with, but weren’t aware of, all the potential advantages for both parties.

    “[Rep and Warranty] on my end was really used primarily as a tool to help one of the Sellers become comfortable with the transaction, and that was based on their prior experience,” says Rob. “This person was very, very concerned about this, and Rep and Warranty insurance pretty much mitigated the issue. This was something that could have been really, really time intensive had we not used the solution, and it could have derailed the deal.”

    This is the perfect example of one of R&W insurance’s biggest benefits: it smooths negotiations, removing the contentious elements of escrow and holdback, which also speeds up the journey to a final Purchase and Sales Agreement and eventual closing.

    For the Buyer, it gives reassurance that they will be paid promptly if there is a breach in one of the Seller’s reps, without the need to go after money held in escrow that would normally go to the acquired company’s management team… that could now be, as is the case with RedCAT, part of the Buyer’s organization.

    Overcoming Other Complications That Delayed the Deal

    As negotiations progressed and the due diligence process began, other issues began to emerge. And what happened should provide helpful tips for other lower middle market companies contemplating a sale by showing them what they can be doing now to prepare.

    The issue was the financials. As a smaller company, RedCAT didn’t have the amount of financial data required, and it wasn’t in a format Broadtree was familiar with.

    This often happens due to lack of resources. For example, in RedCAT’s case they didn’t have an investment banker or adviser actively pushing the deal. The founders were working on the deal, which takes significant time, as they continued to run the business.

    The financials themselves were good, but the quality of the data reflecting that was different than you see in larger companies. The other issue was the technical diligence, which is vital with a software company. But soon enough, Broadtree understood the software development process, code base, and related items. Having R&W backing them up was an unexpected, but welcome benefit.

    What’s Next for Broadtree

    Broadtree Partners, after this positive experience with R&W insurance, now consider this coverage to be part of their strategy for acquisitions going forward.

    Instead of being reactionary to a Seller’s requirements (for example, a banker who needs it on the deal) as they have in the past, this PE fund plans to introduce it early in the deal process because of the benefits it offers both Buyer and Seller.

    “This is an immediate part of my toolkit, one that can allow some risk mitigation on my side if I feel the need, and, two, I think it’s also a great tool to help overcome some Buyer discomfort if they’re worried about the sort of risks to the deal that Rep and Warranty insurance can cover,” says Rob. “I would not hesitate to use it again.”

    At this point, RedCAT Systems is well on its way to growing to the next level. They’ve acquired new customers and are gearing up for a big hire to push further growth. And it might not have happened, had Representations and Warranty insurance not entered the picture.

    Note: This is Part 1 of a two-part series examining the Broadtree Partners acquisition of RedCAT Systems, focusing on the use of R&W insurance. Here we covered the deal from the Buyer’s perspective. Coming up next time, we’ll check out how the Seller saw things develop.

    If this case study has interested you in Representations and Warranty insurance, contact me, Patrick Stroth, at pstroth@rubiconins.com.

  • The Top 8 Questions About Representations and Warranty Insurance
    POSTED 10.16.18 M&A

    The typical M&A deal can be a long, drawn-out process – and painful, too. Negotiations on the Purchase and Sale Agreement can stretch out for months – or longer – as lawyers haggle over terms and contract language. And Sellers are often dismayed by how much money is held in escrow at closing to cover indemnity.

    There’s a way to make those problems go away:
    Read More >

  • Representations and Warranty Insurance Pricing Trends for 2018
    POSTED 7.25.18 M&A

    From a cost perspective, there’s never been a better time to deploy Representations and Warranty (R&W) insurance in M&A deals.

    Read More >

  • The Process of the Due Diligence Call for R&W Insurance Coverage
    POSTED 6.27.18 M&A

    Representations and Warranty insurance is the ideal way to protect both Buyer and Seller in an M&A transaction. If there is a breach of a representation or warranty in the purchase and sale agreement, they are protected. Both sides come out ahead because the risk is transferred to a third party: the insurance company.
    Read More >