Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, and Mergermarket today jointly released the Risk in Review 2019: EMEA report. Findings from the report show that the uptake of M&A insurance across the EMEA region over the last 18 months has continued to climb despite a drop off in overall M&A deal activity.
Deal value in EMEA fell by almost a quarter over the first six months of 2019, according to Mergermarket data, declining 23% from US$683.8bn in H1 2018 to US$528.4bn in H1 2019.
Despite the drop in M&A and the difficult deal backdrop, demand from Aon’s clients in EMEA for deal-related M&A solutions – particularly, warranty & indemnity (W&I), tax and contingent risk insurance – has remained resilient. Both the volume of M&A on related deals in which Aon has been involved, and the aggregate amount of M&A insurance placed in relation thereto by Aon, have remained constant. In H1 2019 there were 165 insured deals with $9.1bn limits, consistent with the 166 deals with limits of $9.2bn in H1 2018.
“Aon has seen an evolution and maturation of the M&A insurance and other transaction liability insurance market”, said Alistair Lester, CEO, M&A and Transaction Solutions EMEA at Aon. “Private Equity Firms and corporations in EMEA have become increasingly comfortable with deploying insurance capital to manage deal risk and complex tax, litigation and other unique business risks as part of capital management strategies.”
Report survey key findings:
- More than half (52%) of survey respondents expect the number of M&A deals to fall by between 2% and 5%, or by more than 5%, over the next twelve months.
- 25% of respondents cited evaluating macroeconomic/political risk and remaining disciplined through deal processes to avoid overpaying as the main challenges dealmakers faced when executing deals on the buyside.
- 44% of respondents say sellers have demanded somewhat more favorable terms on deal terms over the last 18 months, with 28% saying sellers have pushed for much more favorable terms.
About the Risk in Review 2019: EMEA report
This report – which forms part three of a four-part series covering M&A insurance trends in North America and Asia-Pacific as well as a comparative global shortly after the close of 2019 – takes a detailed look at the uptake and use of transaction insurance products in EMEA. The coverage includes analysis of data on how M&A insurance is being used, as well as a survey of corporates, private equity firms and M&A advisers exploring their insights into the risks and opportunities present in the EMEA transaction market.