VC/PE portfolio services
Specialized risk management for your portfolio
Comprehensive solutions for insurance and risk management
The venture capital and private equity sectors are driving change in many areas of the global and German economy. While insurance brokers have also found their way into our industry, we as Risk Partners Technology are the specialists for risk management in portfolio companies.
Increasing regulatory complexity as well as bureaucratic and legal hurdles require a strong management focus on compliance in addition to the expansion of the actual business model. Insurance is often neglected, as the impact of inadequate insurance policies only occurs in the future and only with a certain degree of probability. However, if a loss event occurs that threatens the existence of the company, it is particularly relevant for investors that the capital invested is lost and their own fund performance is sometimes severely impaired.
Current examples can be seen in the area of cyber attacks, which have been on the rise for years and now represent lucrative shadow business models. No matter how good your own cyber security is, a good hacker who sets out to do so will eventually penetrate your systems and paralyze them or even gain access to your customers. In addition, attacks by states are also on the rise and pose a threat to innovative companies.
At Risk Partners Technology, we offer you comprehensive insurance and risk management solutions for the entire life cycle of investments. Especially for the exit - be it private (M&A insurance such as W&I insurance) or public (M&A insurance / POSI insurance & D&O insurance).
Termsheet input for investments
As a specialized insurance broker for technology companies, we support VC and PE funds in the early stages of the investment decision. Our expertise enables us to identify and evaluate critical insurance aspects in term sheets. We analyze existing insurance structures for potential risks and gaps in cover, define necessary minimum insurance sums and cover and develop tailor-made insurance concepts for technology-based business models. In doing so, we pay particular attention to modern risks such as cyber threats, intellectual property disputes and professional indemnity aspects, which are of particular importance to tech companies. This early involvement in the investment process enables investors to consider potential insurance costs and risks as early as the valuation stage and to anchor corresponding agreements in term sheets.
In addition, we also help specialist lawyers to draft or negotiate the insurance-related clauses to ensure that the desired hedging focus is correctly translated into the clause. We regularly see clauses with a wide range of interpretation, which can leave a big question mark over whether the objective has been achieved.
We also provide support in designing the requirements for adequate D&O insurance and key man insurance in the event of the loss of founders or key employees.
We offer investors a thorough examination of the insurance aspects as early as the pre-investment phase.
This includes analyzing existing insurance policies, defining minimum standards and advising on D&O and key man insurance for founders and key personnel.
Portfolio Insurance Check
At Risk Partners Technology, we offer a comprehensive portfolio insurance check for venture capital and private equity funds with a proven track record.
We use a standardized, efficient process to record the important insurance information of your portfolio companies. This structured approach enables a thorough analysis of existing insurance portfolios and policies as well as the identification of potential coverage gaps and optimization opportunities. We then carry out an individual review of each portfolio company, with a particular focus on technology-specific risks such as cyber risks, IP protection and tech E&O. We then discuss the results and specific recommendations for action with the CFOs in order to ensure optimum protection for the portfolio companies and to transfer risks that threaten the existence of your portfolio to insurers via a clean risk transfer.
How do we proceed?
- Risk identification through standardized recording of relevant information via a fully digitized process across the entire portfolio.
- Risk analysis and assessment (supported by software on request) for each company to enable individual risk management.
- Joint risk calls with the management of the respective companies and our long-standing experts as well as with external specialists where appropriate (e.g. cyber security experts).
- Development of joint risk management strategies (which risks can be accepted, avoided, reduced or transferred?), taking into account the agreed minimum insurance standards of the portfolio.
- Determination of companies' risk-bearing capacity and risk acceptance and impact analysis on KPIs in the balance sheets (how much risk can you afford or do you want to take?).
- Creation of an insurance strategy (what risk should be borne by the company itself, what should be insured? Goal: minimization of risk premiums).
- Implementation and placement of risk and insurance strategies on the insurance market.
- Documentation of the risk workshops including follow-up and preparation of an initial (investor) risk report.
A structured portfolio insurance check process is important
A structured insurance check process for your portfolio can ensure that risks that threaten your existence are covered and that capital is preserved even in the event of unforeseen events. This allows your founders and managing directors to concentrate fully on their actual business.
Risk reporting for PE funds
In conjunction with our portfolio review, we offer investors and managing directors of portfolio companies regular reporting on insurance costs and risk management. Our reporting gives you an ongoing overview of insured and uninsured risks, allowing you to react dynamically to changes in the business.
Your benefits through regular risk reports on your portfolio:
- Sustainable increase in the security level of your portfolio.
- Raising your valuation in the next financing round through value-oriented risk management.
- More efficient management and handling of claims.
- You can CONSCIOUSLY take risks and promote growth!
- Active risk management also entails liability towards your own investors!
Private Equity Portfolio D&O
We support you in every phase of the investment life cycle with comprehensive D&O cover, also and above all in the portfolio companies.
At Risk Partners Technology, we believe in quality advice and really good insurance cover that you can rely on. That's why we help private equity firms from acquisition to exit and everything in between with our service. With transparent pricing and policies, automatic, fast renewals, reduced administration and long-term security, we enable private equity managers to focus on their growth objectives.
Insurance due diligence
What is insurance due diligence?
In the context of an M&A transaction, insurance due diligence refers to the careful examination of the target's current insurance portfolio. This involves analyzing the existing, insurable risks of the company as well as reviewing the existing insurance contracts with regard to the coverage of these risks. At the same time, the quality of the existing insurance contracts is assessed. It is often worth taking a look at the target's claims history to see whether and how certain risks can be covered on the insurance market in the future. Insurance due diligence is particularly important in the purchase process because potentially capital-destroying issues can be identified at an early stage and remedied by the buyer in good time or taken into account in the purchase agreement by means of a guarantee.
What can you expect from us during an insurance due diligence?
As part of the preparation of the due diligence report, we can gather all relevant information through early access to the VDR (Virtual Data Room). We then complete open points as part of the Q&A. In a joint call with the existing management, we record the current risk appetite of the target in the market. The "total cost of risk" is calculated, which includes not only the premium and insurance tax but also the broker's remuneration, losses in the deductible and possible CapEx for risk management (e.g. fire protection).
Often particularly relevant for tech targets:
➞ Review of the target's existing liability agreements with its customers (SLA check and individual contract review).
➞ Cyber security scan and check for correct insurance cover and insurability.
➞ Review of accumulation clauses in insurance contracts for financial losses and their limitation of insurance cover.
We use the information obtained to prepare the insurance due diligence report and classify the insured risks for you (categorized as over/under/uninsured). We create an individual benchmarking for you, in which we compare the target's insurance policies with comparable companies from our client portfolio and the data of leading major brokers in Germany. This allows us to evaluate the future insurance costs before the purchase and take cost savings or additional costs into account when making the purchase decision. By assessing the "total cost of risk", which takes into account not only the insurance premiums but also taxes, broker remuneration and deductibles as well as CapEx for risk management, the risk can be comprehensively classified. In addition, the report can be taken into account as part of the SPA or the W&I policy.
With our insurance roadmap, we show you the implementation of the critical points in a timeline. Of course, this also includes the plan for merging or converting existing policies. Our long-standing industry experts are responsible for post-closing implementation.
Do you have a current project that we can support you with? Please book an appointment!
Our approach
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Feel free to contact our experts for a non-binding consultation!