Management Consulting

In the realm of real estate acquisitions, clients often face significant risks associated with undisclosed liabilities, particularly during mergers and acquisitions (M&A). Aon’s specialists, Anka Taylor and David McCann, highlight the challenges investors encounter when potential human errors and tax liabilities threaten the integrity of deals. For instance, a notable case involved a $700 million deal that collapsed due to accounting irregularities, underscoring the critical need for robust risk management solutions. To address these niche issues, Aon provided tailored insurance solutions, specifically warranty and indemnity insurance alongside tax liability insurance. This dual approach allows investors to mitigate risks identified during due diligence, particularly when disagreements arise between buyers and sellers regarding the materiality of tax risks. By utilizing insurance as a substitute for traditional indemnities and escrows, clients can avoid tying up capital, which is especially crucial for private equity and real estate funds focused on achieving specific return targets. The implementation of these insurance solutions has proven beneficial, as insurers are increasingly willing to underwrite suitable risks, thanks to a growing pool of underwriters with tax specializations. This not only expedites the risk analysis process but also enhances the overall confidence in the underwriting decisions, thereby reducing potential obstacles. As a result, clients can navigate complex M&A transactions with greater assurance, unlocking deals that might otherwise remain stalled due to unresolved liabilities.