Management Consulting

A leading information services provider faced a challenge when disposing of its stake in a conference business, as the buyer sought to defer half of the payment for 12 months. To address the seller's concerns regarding the buyer's ability to fulfill this deferred payment, Aon implemented a tailored credit insurance solution. This solution provided the seller with the necessary assurance against the risk of non-payment, thereby facilitating the completion of the deal while allowing the buyer the flexibility they required. In another instance, Aon structured a surety solution for Warburg Pincus during their acquisition of Leumi Card for NIS2.5 billion. The deal involved payment in three installments, necessitating a guarantee to ensure compliance with deferred payment obligations. Aon provided a deferred consideration bond of USD$600 million, which was more cost-effective than a traditional bank guarantee. This arrangement not only secured the buyer's obligations but also reduced the regulatory capital requirements for the seller, Bank Leumi, due to the high credit rating of the surety providers. Additionally, Aon assisted a European mid-market private equity fund's portfolio company that was facing rising credit exposures. By structuring a credit insurance solution that met Capital Requirements Regulations (CRR) criteria, Aon enabled the company to significantly reduce its risk-weighted assets. This strategic move avoided the need for an expensive equity injection, thereby optimizing the capital structure and enhancing returns for the private equity shareholder. Aon also innovated within the context of UK takeover rules by developing the first cash confirmation bond, a GB£75 million surety instrument for Fiserv, Inc. This solution allowed Fiserv to access funds from its revolving credit facility just before the deal's completion, rather than locking up cash in escrow for months. This not only improved liquidity for the bidder but also simplified the cash confirmation process, facilitating smoother deal execution. Through these tailored solutions, Aon demonstrated how credit insurance and surety can be leveraged in M&A transactions to enhance capital efficiency, provide necessary assurances, and ultimately create value for both buyers and sellers.