|
Advisers to the Vendor introduce deferred consideration insurance to transactions, as they know they can:
1. Secure the Vendor’s headline price for them by agreeing to a secured and guaranteed deferred consideration
2. Ensure the Vendor achieves the headline price regardless of future success of company
3. Ensure the Vendor is the beneficiary of an investment graded instrument
4. Place the deferred debt on the Vendor’s balance sheet (if corporate) as a guaranteed long-term debtor, given the guarantee is investment graded and irrevocable
5. Assist the Vendor in a structured disposal strategy backed by the instrument
6. Avoid the Vendor having to become involved in any legal or collection process for the deferred consideration as the underwriters simply credit the Vendor bank account shortly after default. The underwriters hold the charges and manage any collection process from the purchaser.
- Ensures the Vendor gets the full asking price
- Similar to a bank guarantee but is provided by the insurance market
- Deferred finance is non-cancelable and irrevocable
- Payment is guaranteed regardless of future success of the business
- Secures 100% of the principle deferred amount and with certain insurers we can also insure the vendors interest yield on the deferred amount
- Ensures a quick completion
- Honours the financial obligations of the Purchaser and pays the Vendor deferred consideration payments should the Purchaser fail to do so
- Removes the risk of any non-payment from the transaction
- Insurance market equivalent of a cash-backed bank guarantee
|