Marsh Pacific has had a record year in M&A work

Marsh Pacific had a highly successful year in mergers and acquisitions (M&A) work, surpassing previous records with 40 deals, up from 31 the year before. This success was accompanied by a 71% increase in the number of policies placed by Marsh, reaching 134 in total. One notable trend observed was the increased demand for warranty and indemnity (W&I) insurance, particularly for deals under $US50 million and those exceeding $US1 billion. Historically, larger deals faced challenges related to costs, but these issues have been alleviated by a more competitive and insured-friendly W&I market in the Pacific region.

Competition among insurers intensified, leading to a noticeable decrease in rates due to the influx of new players and the adoption of aggressive pricing strategies. Technology transactions, which represented 18% of Marsh-supported deals, experienced significant growth compared to the previous year, aligning with expectations for increased M&A activity in the sector. Additionally, there was an uptick in M&A deals within renewables and infrastructure industries, particularly digital infrastructure projects.

The report highlighted a 50% increase in claims notifications, with misstatements of accounts posing a significant concern during transactions. Marsh views this surge in claims as a positive sign of heightened awareness and confidence in the effectiveness of W&I insurance as a risk management tool. Notably, this increase may also indicate a greater level of scrutiny and vigilance among insured parties in detecting breaches. Clustering of claims further suggests potential systemic issues within specific target businesses, underscoring the critical role of insurance in mitigating such risks during M&A transactions.

Looking ahead, Marsh anticipates continued growth in M&A activity, building upon the momentum established in the latter half of 2024. The report predicts a robust year for deal-making in the region, citing the ample capital available for investment, particularly within the private equity sector. Investors are under mounting pressure to effectively deploy their cash reserves, contributing to the positive outlook for M&A deals in the foreseeable future.