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Mergers and Acquisitions within the Mining Industry

In mining-industry M&A transactions, both buyers and sellers are at risk of not creating adequate value in acquisition or disposal.
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Fueled by strong commodity prices and repaired balance sheets, mergers and acquisition (M&As) in the global mining sector has accelerated. It takes an expert to recognize and consider the variables inherent in larger transactions, bolt-on acquisitions, and cross-border deals in emerging markets.

In mining-industry M&A transactions, both buyers and sellers are at risk of not creating adequate value in acquisition or disposal. The main issues behind lack of success are:

For buyers:

  • Overpayment.
  • Post-deal completion issues such as uninsured legacy liabilities.
  • Failure to integrate the target smoothly and efficiently.

For sellers:

  • Purchase price disputes.
  • Post-deal completion issues such as warranty and indemnity claims.

Understanding the cause and impact of these issues can mean:

  • A more efficient price, avoiding overpayment or post-close surprises.
  • Improved sale and purchase agreements, avoiding ambiguities in the purchase and sale agreement.
  • Smoother, faster integration, avoiding delays.
  • More efficient corporate governance.

What We Offer

Risk and insurance due diligence reduces the level of uncertainty and reduces the risk of surprises after a deal closes. Marsh’s Private Equity and M&A practice (PEMA) works to provide risk and insurance advice that complements traditional financial, legal, and commercial due diligence. Our advice enables you to better understand the risks in an M&A transaction, and factor those risks into negotiations and pricing. Among the benefits we provide are:

For buyers:

  • Identify risk and insurance issues that affect financial negotiations, such as large retentions, self-insurance, etc.
  • Evaluate insurance programs to determine the quality and extent of remaining insurance limits, as well as the solvency of historic insurers.
  • Identify and resolve issues in the sale and purchase agreement.

For sellers:

  • Identify potential issues that may influence the deal.
  • Identify carve-out costs that may be used by the buyer to negotiate price.
  • Develop pro-forma insurance cost projections.
  • Determine the adequacy of reserves in cases of self-insurance.
  • Place a range of transactional risk solutions, to provide cover against deal obstacles that can lead to purchase price disputes.

Other areas of interest

Claims Management for the Mining Industry

Captive Management for the Mining Industry

Risk Consulting for the Mining Industry