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Identifying and Quantifying Risk as Middle-Market Companies Prepare for the Next Stage

Aug 18, 2020 Decorative image

America’s roughly 235,000 middle-market companies—along with the 16 million smaller companies that hope to move into the category—have long been the growth engine of the nation’s economy. With the impact of COVID-19, social unrest and the economic impacts resulting from both, many middle-market leaders are taking a hard look at the future of the companies they’ve been building for the last decade or more.

Given the inherent limits of organic growth, the obvious strategy becomes some sort of transaction, whether that’s cashing out by selling the company or identifying other companies that appear to be somewhat distressed and undervalued, making them excellent acquisition targets.

Whether a company is currently on the buy side or sell side, there’s increased awareness among middle-market CEOs and boards of the value and importance of having a strategic risk management adviser as part of the deal team. Wise leaders seek expertise capable of looking beyond valuation and operational issues to identify factors that may threaten the success of the transaction or significantly reduce its expected return on investment, and then to devise strategies to transfer, eliminate, or otherwise mitigate the risks.

Hylant is now offering expertise through its M&A and Transaction Solutions team to help CEOs and boards much more accurately understand their risks so they can make more informed decisions. The team focuses on taking a holistic view to reduce uncertainty during complex transactions, protect the safety of investments and maximize financial returns.

Illuminating the Path Forward

A critical element of the team’s approach is the use of its comprehensive risk analysis. Recognizing that companies have access to a limited amount of resources and must deploy those in the most efficient ways to maximize value, the team brings professionals with extensive corporate experience together to study the company and recommend strategies to transfer or mitigate risk. This strategic process drills deeply and breaks down internal silos to both quantitatively and qualitatively identify and manage all of the potential risks.

Perhaps most important, the Hylant team brings CEOs and boards practical options for moving forward. Rather than simply reporting on risk, the team delivers enough information to allow company leaders to make decisions with greater confidence, and then supports those decisions with specific risk management strategies. After all, sometimes the answer company leaders really need is not the answer to the question they’ve been asking. The comprehensive risk analysis looks beyond what’s readily visible to detect the kinds of issues that derail deals or lead to disappointing outcomes.

For example, if a company is considering an acquisition of a competitor, Hylant’s team will employ a risk-focused due diligence process to analyze the risks an acquirer should be aware of, such as those related to property insurance, employee benefits, retirement plans, key employee compensation or life insurance. The company can then draw on Hylant’s expertise to build insurance solutions and place policies that effectively transfer risk to third-party insurers.

Learn More

Members of Hylant’s M&A and Transaction Solutions team bring firsthand experience at working with all of the types of stakeholders involved in transactions. They understand what matters to leaders, boards, outside advisers and funding sources, so they can sharpen understanding among all parties and reduce the potential for problems at every stage of a deal.

Learn more about how we help companies like yours reduce the uncertainty of complex transactions, protect their investments and enhance their returns.

The above information does not constitute advice. Always contact your insurance broker or trusted adviser for insurance-related questions.

Kip Irle, SVP, Strategic Risk Advisor, Alternative Risk, Hylant M&A Transaction Solutions

Joe Herman, SVP, Transactional Risk, Hylant M&A Transaction Solutions