Taking advantage of the recent spike in M&A activity, AXA Equitable and SRS Acquiom have partnered to launch Escrow Shield Plus, an investment alternative for escrow accounts designed exclusively for mergers and acquisitions.
Escrow Shield Plus combines the following:
A collateralized guarantee of principal from AXA Equitable
The opportunity for higher yields than traditional deposit or money market-type products
Liquidity on demand for approved claims against the escrow
- Premium service provided by SRS Acquiom, a privilege of M&A post-closing services
According to Thomson Reuters, more than 40,000 M&A transactions, worth nearly $3.5 trillion, were announced worldwide in 2014. In a typical M&A transaction, roughly 10 to 20 percent of a deal’s value is deposited into an escrow account upon closing, where it is generally held for one to two years.
This deposit serves as a risk mitigation tool for the buyer in the event that a seller misrepresents certain facts about its business or fails to meet specific terms of the agreement. The funds are typically invested in money market deposit accounts, money market funds or treasury funds — historically low yield investments.
This marks the first time a major insurance company has entered the M&A business to provide merger parties with a new way to manage claims liquidity, obtain principal protection and enhance its yield.
In light of this recent news, LifeHealthPro.com posed a few questions to Martin Woll, head of the institutional savings business line at AXA U.S.
LHP: In your opinion, why has no insurer entered this field to date?