Successfully managing Private Equity Funds
A key success factor for Private Equity Funds is to unlock operational improvements in the investment portfolio. At the same time, comprehensive risk management strategies can significantly improve investment returns. Cross-border M&A investments are another lucrative strategy for many Private Equity Funds.
Understanding and managing the risks involved in these M&A transactions, especially when investing in unfamiliar markets and industries, often poses challenges. Reviewing and analyzing the insurance coverage of portfolio companies can identify gaps in coverage and potential for savings in insurance premiums as well as healthcare and benefits costs. With our experience and market knowledge, Funk’s dedicated team of experts is committed to improve your fund performance.
Our services for Private Equity Funds
Fund level risk management
- Directors’ & Officers’ (D&O) insurance and Errors & Omissions (E&O) insurance solutions protect the shareholding managers of a Private Equity Fund against liabilities towards investors.
- Cyber insurance protects IT systems and sensitive data.
- IPO covers are specific insurance solutions for the special liabilities that can arise in connection with initial public offerings and bond issuing.
Transactional risk solutions
- Risk and insurance due diligence lowers the level of uncertainty in a transaction. Funk experts review the insurance cover of the target company, identify potential risks or gaps in coverage and project future costs and potential savings associated with the insurance program of the target company.
- Pension plan analysis identifies and assesses pension and benefit commitments associated with the target.
- W&I insurance covers breaches of representations, warranties or certain indemnities (including the tax covenant) given by the seller to the buyer in the Sale and Purchase Agreement. Transferring the seller’s guarantees to the insurer is beneficial for both the seller and the buyer, and the often critical negotiations about warranties and indemnities no longer become a deal breaker.
- Specific tax risk insurance covers known tax risks.
- Keyman insurance covers the financial loss resulting from the death, critical illness or incapacity of a key individual in the target company.
Portfolio company risk management
- Improving the existing insurance program of a target company by implementing the recommendations highlighted during the insurance due diligence
- Our portfolio management service reviews and assesses both insurance policies that apply across all portfolio companies and the insurance programs of single portfolio companies. We identify gaps in coverage and potential for cost savings. Deficient programs are replaced with broader coverage or a more optimal program structure.
- Harmonization or improvement of pension and benefit commitments
- Implementation of Funk’s IT-based risk management system allows the Private Equity Fund to monitor the risk management of all portfolio companies.
Risks
Liability risks
The potential liability of companies varies depending on the industry or clientele. Nevertheless, all companies have one thing in common: even small mistakes can lead to severe losses.
Property damage and BI risks
While property insurance is a basic protection every company should have, the risk of business interruption is increasing steadily as well – especially for globally connected players.
Risks in M&A processes
The M&A market is booming: in a constantly changing market environment, transactions are the key to the success and future viability of companies. But their risks should not be underestimated.
