Strategic Adviser

Joshua Halpern
Managing Director
Aon, New York

Representations and warranties insurance is part of just about every M&A, and Joshua Halpern’s clients are fortunate he brings his knowledge in that area along, as well as his experience as a practicing attorney.

As one executive said, getting a policy isn’t the challenge. It’s getting a policy that fully protects the organization — typically  in a short timeframe.

The company required “a very complex rep and warranty placement” for an acquisition. “Josh did a phenomenal job in terms of keeping everybody focused, delivering within the timeline we required, and winning the confidence of our M&A group. They were quite pleased with the job Josh did,” said Bob Cerutti, vice president, global risk management, Tyco.

Alcoa Inc., which was acquiring a company from a private equity firm, counted on Halpern “to take the reins on what needed to be done,” said Debra Samuel, manager, insurance risk management.

“He was available all hours and throughout the weekend. He went above and beyond what I am used to from a broker serving an account. It’s one thing for a broker to say we have the ability to do something, but it’s another thing for them to actually execute and do it,” she said.

“I have a comfort level in knowing he knows what he is doing,” Samuel said.

Exceptional Service

Tony Palumbo, AIC
Senior Vice President
Lockton, St. Louis

The complexity of private equity transactions can be daunting, requiring strategic insights, in-depth knowledge and responsiveness to client needs. Tony Palumbo excels in the field.

David Schultz, treasurer of Optimas OE Solutions, took on a new role with the company when it was purchased by a private equity firm. Breaking the program off from the selling company was a complex operation. The company also had to rely on Palumbo to help manage its recall exposure in a difficult environment.

“He made the effort to learn the exposure and get decent pricing from the underwriter, and fine-tune it so the coverage was more applicable,” he said. “Tony did a really nice job of pulling together a good solution. He understands the risk, meeting our needs and timing,” Schultz said. “He made my job easy.”

Paul Bamatter, partner and CFO of American Industrial Partners, called Palumbo “an exceptional human being.”

Palumbo and the Lockton team “are an extension of the AIP family. We treat them as a partner. They have large latitude to make decisions on our behalf. They really look after us.”

Part of that was flying into Mexico to help with supply chain and business interruption issues the day after a hailstorm.

“You don’t always get that kind of service from brokers,” he said.

A Trusted Adviser

Dan Schoenberg
Managing Director
Aon, New York

With his background as a tax lawyer and deep understanding of the tax and transaction risk insurance market, Dan Schoenberg’s clients depend on his insights and customer service as well as his technical knowledge. One policy crucial to M&As is representations and warranties coverage.

“Reps and warranties is a totally different type of animal,” said one PE executive. “You are an adviser to both sides of the deal. It’s one of the loneliest places to be. You can’t break trust with either side or you will blow up your ability to do deals in the future.

“It takes a very unique talent and personality to survive these types of placements,” the executive said, noting that Schoenberg worked with him on “a monster deal” that included a $385 million limit on the policy. But Schoenberg invests just as much time and energy on every placement no matter what the size.

“Dan is very diligent and responsible,” said one company executive. “He is always there and very professional. He is consistent in his willingness to help his clients.”

In another transaction, Schoenberg structured, negotiated and secured a tax insurance policy in the hundreds of millions that involved nearly a dozen carriers for a company that reorganized and sold a unit to a private equity firm.

“We were pleased with the diligence, the follow-through and execution,” said the company finance executive.

Unraveling the Complications

Matthew Heinz
Managing Director
Aon, New York

Getting reps and warranties insurance is especially difficult for private equity funds focusing on health care. Insurers are wary of the risk, especially with the exposures related to regulatory compliance. Plus, health care’s revenue is complex for organizations dealing with Medicare and Medicaid.

When Triton Pacific Capital Partners were selling a health care company, they relied on Matthew Heinz to take care of an R&W carve-out on the health care side. “Matt was a very thoughtful guy,” said Joe Davis, managing partner. “He’s smart and his legal background as an M&A lawyer by training was very helpful. “It was very clean, a right-down-the-fairway deal,” he said. “Plus he is easy to work with.”

On another private equity firm’s “complicated transaction,” Heinz was able to place reps and warranties coverage in an expedited timeframe, even though the transaction included some ongoing litigation, said the PE executive.

“There was a little bit of hair on it, but we ended up in a very good place,” he said. “Matt offers great customer service and responsiveness. Also, I think he has a pretty calm, poised disposition particularly when we are in a very stressful environment. He has a strong understanding of the product but he also understands his clients’ needs as well.”

With his mix of expertise and experience – as a lawyer, underwriter and broker – he is able to offer clients sophisticated advice on the structure and substance of coverage and transaction liabilities.

A Phenomenal Result

Joe Roberta. ARm, INS
Managing Director
Beecher Carlson, New York

Joe Roberta helped Paradigm Precision, a PE portfolio company, revamp its entire insurance program last year.

“He knocked it out of the park,” said Patrick Barrett, director, global EHS and risk management. “He helped transition us into a deductible program with $900,000 in savings. He freed up a tremendous amount of cash and with private equity, cash is king.”

Roberta, Barrett said, “did a phenomenal job of helping us go to market to get better pricing and better terms. He cut our total cost of risk by about 50 percent.

“Usually when you hear from a broker, it’s something that’s gone wrong, but Joe is really plugged into our business. He keeps in touch,” he said. Roberta also was instrumental in helping Paradigm insure two acquired European companies last year. “Joe did a great job navigating the waters there and getting us good results.”

For Morgan’s Hotels, Roberta negotiated a buyout with a former casualty insurer, said Steven Benjamin, director of risk management. “I don’t think too many other brokers would have been able to get that done,” he said.

Benjamin noted that all of his brokers are excellent. “Whoever is not working well for me is probably not going to be working on my account for too long.”

But of all those top-notch brokers, he puts Roberta “at the top as far as 2015 goes. … He cleaned up a lot of financial issues with current and past casualty programs. And there was a lot of collateral hanging in the balance,” he said.

Cleaning Up the Mess

Edward Todd, CPCU, ARM, AIC
Managing Director
Aon, New York

In one complicated deal, Edward Todd was able to obtain “insurance pricing for a messy carve-out with a lot of messy pieces which was below what the company was paying,” said one private equity executive. “You never find that.”

“He is a great adviser and sounding board,” the executive said. “He is extremely professional, accountable and online 24/7 if you need him. He clearly understands, to a painstaking detail, the underlying products.

“His expertise and confidence got us big savings,” the executive said.

The treasurer of a privately held company said much the same.

“We are a very acquisitive company,” the executive said. “Ed has saved us quite a bit of money by pointing out specific things in stock purchase agreements that could be negative to us post-acquisition. He identified certain risks where we have been able to reduce our offer as a result of certain things he pointed out. Nothing gets past him. He has stepped up to the plate and done a lot more sometimes than the fee that we pay him warrants.”

Another PE executive said that Todd and his team assessed the exposures involved in a very complicated transaction and offered various strategies to address potential risks.

“He needed to understand the project at a very granular level. Ed and his team did a great job. He also did great benchmarking work across not only our portfolio but at comparable companies and projects so we were comfortable with the exposure level they were recommending.”

Finalist:

Robert Jevens
Vice President, Transaction Risk Practice
Equity Risk Partners, San Francisco