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Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance

Marsh expands M&A risk services

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Marsh has expanded its private equity and mergers and acquisitions (PEMA) insurance services by forming a tax liability practice aimed at easing corporate clients' regulatory concerns.

The practice is a first for Marsh in the Pacific region. The broker says it has been established to meet a growing need from clients in an increasingly complex regulatory environment.

Marsh JLT Specialty Head of PEMA Chris McDermott says there are perceptions the Australian Tax Office is ramping up enforcement efforts, while buyers and sellers can also receive different tax law interpretations related to proposed deals and business structuring.

“The allocation of liability on the M&A front is becoming an occasional impediment to getting a deal done, so this is one method of removing that impediment,” he told insuranceNEWS.com.au.

Marsh has employed mergers and acquisitions tax specialist Kane Sim from PwC to lead the new practice. Mr Sim will be based in Sydney, and the brokerage expects to expand the practice to New Zealand as well, reflecting the geographic spread of its current M&A business.

Mr McDermott says the Marsh PEMA team worked on more than 150 transactions last year in Australia and New Zealand.

“Marsh’s worked-on deals increased, which tells me that M&A insurance products are on the rise despite the fact the deal market might have been flat or slighter down last year compared to 2018,” he said.

“Our new tax liability practice complements our well-established M&A services offerings and enhances our ability to offer our clients highly specialised tax-related risk strategies.”

Marsh’s global PEMA business practice works with clients through an investment cycle that includes capital-raising, M&A, portfolio management and exit strategies. Tax liability offerings have already been introduced in recent years in Europe and North America.

Typical tax risks that can be insured include taxation of gains on disposal, availability of losses, research and development claims and debt and equity treatment.

Mr Sim worked with PwC in the Sydney and Boston offices. He is also a former practicing solicitor and has strong experience M&A, strategic tax planning and related governance and operational affairs.