Management Consulting

In the food and drink industry, companies face significant challenges in achieving organic growth, particularly in an inflationary environment. To navigate these difficulties, businesses are increasingly turning to mergers and acquisitions (M&A) and intellectual property (IP) strategies to accelerate growth and maintain competitiveness. Aon’s approach to supporting clients in this sector involves a comprehensive understanding of critical factors during M&A transactions, including due diligence on cybersecurity, technology, and climate risks, as well as addressing both known and unknown risks through tailored insurance solutions. Aon has developed specific insurance-backed solutions that enhance the M&A process. For instance, Warranty and Indemnity (W&I) insurance has become a vital tool, allowing sellers to achieve clean exits from their transactions, thereby improving capital allocation efficiency. This insurance covers inaccuracies in the seller’s statements, which can significantly streamline negotiations and foster ongoing commercial relationships post-transaction. Additionally, the use of tax liability insurance has surged, providing companies with a means to mitigate identified tax exposures, which can expedite M&A negotiations and facilitate smoother transactions. Moreover, Aon has introduced IP liability insurance to protect food and drink companies against the high costs associated with IP infringement claims, which can average over $13 million per case in the U.S. This insurance covers various aspects, including direct infringement, contractual indemnities, and IP rights validity, thereby safeguarding businesses from potentially catastrophic legal challenges. Furthermore, collateral protection insurance, or IP lending, has emerged as a valuable financing tool for IP-rich businesses, enabling them to leverage their intangible assets for cash flow and growth, particularly in the early stages when tangible assets may be limited. Through these tailored solutions, Aon not only addresses the immediate risks associated with M&A and IP but also empowers food and drink companies to optimize their capital structure and enhance their competitive positioning in a challenging market landscape.