Mergers & Acquisitions (M&A) transactions need a Declaration of No Objection from the Supervising Authorities before they can be executed. This can sometimes be a long and onerous process, as the requirements have become more stringent. In particular when a significant strategic change is involved, like integration in a larger company or dividing the company into different parts with different strategies and/or shareholders.
It is our experience that Deal Teams or Transaction Teams are well-versed in the financial and actuarial risks they need to communicate, manage and mitigate. However, many underestimate (and therefore overlook) the seriousness in which authorities take the risks associated with operational and regulatory compliance aspects. These elements have become more important and the demands placed on them have grown stricter over time.
We support our clients by means of a pro-active M&A Risk Assessment.
First, we identify potential risks in the financial, actuarial or insurance, operations and regulations & compliance areas. We do this in close collaboration with our clients (and their deal-team), using the transaction documents and the implementation plans as important inputs.
Secondly, we list all mitigation strategies to avoid, reduce, control or transfer the risks.
The residual risks should be acceptable and match the defined risk appetite of the buyer.The M&A Risk Assessment may induce an updated version of the implementation plan to reduce the risks involved.
The M&A Risk Assessment document serves as proof of the robustness of the preparatory work that has been done to consummate the transaction and execute the implementation plan. As such, the M&A Risk Assessment is an integral component in smoothing and expediting the process of obtaining the Declaration of No Objection for the intended transaction.