The Challenge

An established west coast private equity firm approached Equity Risk Partners for assistance in executing the business plan of a new investment. The plan called for the simultaneous acquisition of two existing firms in the hair care products industry and the immediate consolidation of those two firms into a single surviving operating entity. A key element of the investment would be the use of a virtual manufacturing and distribution model where outside vendors would be utilized to formulate, bottle, and ship products to the company’s distributors worldwide. Equity Risk Partners was asked to help in evaluating the potential exposures presented by the two firms to be acquired as well as to design a comprehensive go-forward insurance program to protect the new combined entity and its private equity sponsor.

Our Solution

Working with both company management and the private equity firm principles, Equity Risk Partners first completed a due diligence review of the target hair care product firms, reporting our findings and recommendations to the private equity firm. Go-forward insurance cost estimates were also provided for use in the proforma modeling process. We then designed a cost effective property & casualty insurance program and had it ready for implementation when the transaction was ready to close. In addition to brokering insurance coverage for the new entity, Equity Risk Partners also provided value-added recommendations on establishing formal insurance and indemnification requirements for vendors and suppliers in support of the virtual manufacturing model.