Property insurance provides protection against most risks to property , such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance , earthquake insurance , home insurance , or boiler insurance . Property is insured in two main ways—open perils and named perils.
90-724: Liberty Mutual Insurance Company is an American diversified global insurer and the sixth-largest property and casualty insurer in the world. It ranks 71st on the Fortune 100 list of largest corporations in the United States based on 2020 revenue. Based in Boston, Massachusetts , and featuring the Statue of Liberty (formally Liberty Enlightening the World ) on its logo, it employs over 45,000 people in more than 900 locations throughout
180-401: A merger is the legal consolidation of two business entities into one, whereas an acquisition occurs when one entity takes ownership of another entity's share capital , equity interests or assets . From a legal and financial point of view, both mergers and acquisitions generally result in the consolidation of assets and liabilities under one entity, and the distinction between the two
270-510: A subsidiary is often created in countries where legally recognized mutual-company benefits cannot be enjoyed. The current CEO is Timothy M. Sweeney. He succeeded his predecessor David H. Long on January 1, 2023. Long was preceded by Edmund "Ted" Kelly. Kelly was appointed CEO in 1998, and stepped down from the Board of Directors as chairman in April 2013. Liberty Mutual was founded in 1912 as
360-467: A 2006 television commercial depicting people doing good for others, reporting that the "overwhelming" positive response led to its decision to create the website The Responsibility Project . Liberty Mutual is the sole corporate sponsor of the long-running PBS documentary series American Experience . In 2011, as part of the company's "Real America" campaign, the company introduced two new commercials featuring Sacagawea and Paul Revere . In 2011,
450-508: A Malaysia insurance company. Liberty Mutual conducts all of its business through two strategic business units : US Retail Markets, and Global Risk Solutions. Passenger automobile, homeowners, life, annuity and other property and casualty insurance products are available via Liberty Mutual's US Consumer Markets line. These products are branded under the Liberty Mutual Insurance and Safeco names, and are distributed via
540-405: A business retain just a handful of key players that would have otherwise left. Organizations should move rapidly to re-recruit key managers. It's much easier to succeed with a team of quality players that one selects deliberately rather than try to win a game with those who randomly show up to play. Mergers and acquisitions often create brand problems, beginning with what to call the company after
630-569: A business, which accrues to both categories of stakeholders, is called the Enterprise Value (EV), whereas the value which accrues just to shareholders is the Equity Value (also called market capitalization for publicly listed companies). Enterprise Value reflects a capital structure neutral valuation and is frequently a preferred way to compare value as it is not affected by a company's, or management's, strategic decision to fund
720-486: A certain size. An acquisition/takeover is the purchase of one business or company by another company or other business entity. Specific acquisition targets can be identified through myriad avenues, including market research, trade expos, sent up from internal business units, or supply chain analysis. Such purchase may be of 100%, or nearly 100%, of the assets or ownership equity of the acquired entity. A consolidation/amalgamation occurs when two companies combine to form
810-496: A compromise decision. In May 2007 New York Governor Eliot Spitzer announced more than $ 4.5 billion would be made available to rebuild the 16-acre (65,000 m ) WTC complex as part of a major insurance claims settlement. In the wake of Hurricane Katrina , several thousand homeowners filed lawsuits against their insurance companies accusing them of bad faith and failing to properly and promptly adjust their claims. On 24 June 2009, Florida Governor Charlie Crist vetoed
900-532: A covered loss prevents a person from living in their home, policies can pay the expenses of alternate living arrangements (e.g., hotels and restaurant costs) for a specified period of time to compensate for the "loss of use" of the home until the owners can return. The additional living expenses limit can vary, but is typically set at up to 20% of the dwelling coverage limit. Owners need to talk with their insurance company for advice about appropriate coverage and determine what type of limit may be appropriate. Following
990-464: A fire loss covered under the fire insurance policy, the insured shall immediately give notice thereof to the insurance company. Within 15 days of the occurrence of such loss the insured should submit a claim in writing giving the details of damages and their estimated values. Details of other insurances on the same property should also be declared. Misc: Acquisitions Mergers and acquisitions ( M&A ) are business transactions in which
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#17327918766631080-473: A function of their acquisition activity. Therefore, additional motives for merger and acquisition that may not add shareholder value include: The M&A process itself is a multifaceted which depends upon the type of merging companies. The M&A process results in the restructuring of a business's purpose, corporate governance and brand identity. An arm's length merger is a merger: ″The two elements are complementary and not substitutes. The first element
1170-433: A larger and/or longer-established company and retain the name of the latter for the post-acquisition combined entity. This is known as a reverse takeover . Another type of acquisition is the reverse merger , a form of transaction that enables a private company to be publicly listed in a relatively short time frame. A reverse merger is a type of merger where a privately held company, typically one with promising prospects and
1260-548: A matter of convenience into one of urgency, a change of opinion reflected in Sir Christopher Wren 's inclusion of a site for 'the Insurance Office' in his new plan for London in 1667". A number of attempted fire insurance schemes came to nothing, but in 1681, economist Nicholas Barbon and eleven associates established the first fire insurance company, the "Insurance Office for Houses", at the back of
1350-426: A merger or acquisition transaction can range from political to tactical. Ego can drive choice just as well as rational factors such as brand value and costs involved with changing brands. Beyond the bigger issue of what to call the company after the transaction comes the ongoing detailed choices about what divisional, product and service brands to keep. The detailed decisions about the brand portfolio are covered under
1440-444: A need for financing, acquires a publicly listed shell company that has few assets and no significant business operations. The combined evidence suggests that the shareholders of acquired firms realize significant positive "abnormal returns," while shareholders of the acquiring company are most likely to experience a negative wealth effect. Most studies indicate that M&A transactions have a positive net effect, with investors in both
1530-727: A network of more than 2,300 sales professionals. Other distribution means are call centers, third-party producers and the company's own website. Over 10,000 insurance agencies across the U.S. carry Safeco-branded products. The Global Risk solutions insurance line offers commercial and specialty products, such as marine, energy, aviation, professional liability and crisis management, offered through 40 Liberty International Underwriters offices worldwide. In addition, Liberty International Underwriters provides global multi-line insurance and reinsurance written on its Lloyd's Syndicate 4472 platform. Global Specialty also includes reinsurance products offered through Liberty Mutual Reinsurance. Founded in 1954,
1620-451: A new enterprise altogether, and neither of the previous companies remains independently owned. Acquisitions are divided into "private" and "public" acquisitions, depending on whether the acquiree or merging company (also termed a target ) is or is not listed on a public stock market . Some public companies rely on acquisitions as an important value creation strategy. An additional dimension or categorization consists of whether an acquisition
1710-434: A situation where one company splits into two, generating a second company which may or may not become separately listed on a stock exchange. As per knowledge-based views, firms can generate greater values through the retention of knowledge-based resources which they generate and integrate. Extracting technological benefits during and after acquisition is an ever-challenging issue because of organizational differences. Based on
1800-550: A special committee of independent directors; and 2) conditioned on an affirmative vote of a majority of the minority stockholders, the business judgment standard of review should presumptively apply, and any plaintiff ought to have to plead particularized facts that, if true, support an inference that, despite the facially fair process, the merger was tainted because of fiduciary wrongdoing.″ A Strategic merger usually refers to long-term strategic holding of target (Acquired) firm. This type of M&A process aims at creating synergies in
1890-468: A total value of US$ 2,164.4 bil. Some of the largest mergers of equals took place during the dot-com bubble of the late 1990s and in the year 2000: AOL and Time Warner (US$ 164 bil.), SmithKline Beecham and Glaxo Wellcome (US$ 75 bil.), Citicorp and Travelers Group (US$ 72 bil.). More recent examples this type of combinations are DuPont and Dow Chemical (US$ 62 bil.) and Praxair and Linde (US$ 35 bil.). An analysis of 1,600 companies across industries revealed
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#17327918766631980-456: Is friendly or hostile . Achieving acquisition success has proven to be very difficult, while various studies have shown that 50% of acquisitions were unsuccessful. "Serial acquirers" appear to be more successful with M&A than companies who make acquisitions only occasionally (see Douma & Schreuder, 2013, chapter 13). The new forms of buy out created since the crisis are based on serial type acquisitions known as an ECO Buyout which
2070-478: Is a co-community ownership buy out and the new generation buy outs of the MIBO (Management Involved or Management & Institution Buy Out) and MEIBO (Management & Employee Involved Buy Out). Whether a purchase is perceived as being "friendly" or "hostile" depends significantly on how the proposed acquisition is communicated to and perceived by the target company's board of directors, employees, and shareholders. It
2160-426: Is a triangular merger, where the target company merges with a shell company wholly owned by the buyer, thus becoming a subsidiary of the buyer. In a "forward triangular merger ", the target company merges into the subsidiary, with the subsidiary as the surviving company of the merger; a "reverse triangular merger" is similar except that the subsidiary merges into the target company, with the target company surviving
2250-440: Is also accompanied by Doug who tries to keep LiMu from acting out. Occasionally, LiMu and Doug will have a potential client in the office and type up a policy while LiMu looks on approvingly. On February 9, 2023, Liberty Mutual began advertising as Liberty at the end of its commercials. Tanner Novlan has appeared in several commercials, alone as well as with "Doug", as a "struggling actor" who has trouble reciting basic facts about
2340-425: Is between two competitors in the same industry. A vertical merger occurs when two firms combine across the value chain, such as when a firm buys a former supplier (backward integration) or a former customer (forward integration). When there is no strategic relatedness between an acquiring firm and its target, this is called a conglomerate merger (Douma & Schreuder, 2013). The form of merger most often employed
2430-399: Is combined into another entity by operation of the corporate law statute(s) of the jurisdiction of the merging entities. In a transaction structured as a merger or an equity purchase, the buyer acquires all of the assets and liabilities of the acquired entity. In a transaction structured as an asset purchase, the buyer and seller agree on which assets and liabilities the buyer will acquire from
2520-425: Is complete, the parties may proceed to draw up a definitive agreement, known as a "merger agreement", "share purchase agreement," or "asset purchase agreement" depending on the structure of the transaction. Such contracts are typically 80 to 100 pages long and focus on five key types of terms: Following the closing of a deal, adjustments may be made to some of the provisions outlined in the purchase agreement, such as
2610-528: Is governed by the All India Fire Tariff that lays down the terms of coverage, the premium rates and the conditions of the fire policy. The fire insurance policy has been renamed as "Standard Fire and Special Perils Policy". The Standard Fire and Special Perils Policy (SFSP) is a kind of traditional insurance product that is specially designed to protect your property and its articles from the unforeseen unfortunate accidents caused due to fire and
2700-426: Is important because the directors have the capability to act as effective and active bargaining agents, which disaggregated stockholders do not. But, because bargaining agents are not always effective or faithful, the second element is critical, because it gives the minority stockholders the opportunity to reject their agents' work. Therefore, when a merger with a controlling stockholder was: 1) negotiated and approved by
2790-412: Is normal for M&A deal communications to take place in a so-called "confidentiality bubble," wherein the flow of information is restricted pursuant to confidentiality agreements. In the case of a friendly transaction, the companies cooperate in negotiations; in the case of a hostile deal, the board and/or management of the target is unwilling to be bought or the target's board has no prior knowledge of
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2880-725: Is not always clear. Most countries require mergers and acquisitions to comply with antitrust or competition law . In the United States , for example, the Clayton Act outlaws any merger or acquisition that may "substantially lessen competition" or "tend to create a monopoly ", and the Hart–Scott–Rodino Act requires notifying the U.S. Department of Justice 's Antitrust Division and the Federal Trade Commission about any merger or acquisition over
2970-415: Is possible only when resources are exchanged and managed without affecting their independence. A corporate acquisition can be structured legally as either an "asset purchase" in which the seller sells business assets and liabilities to the buyer, an "equity purchase" in which the buyer purchases equity interests in a target company from one or more selling shareholders or a "merger" in which one legal entity
3060-464: Is provided by full-service investment banks- who often advise and handle the biggest deals in the world (called bulge bracket ) - and specialist M&A firms, who provide M&A only advisory, generally to mid-market, select industries and SBEs. Highly focused and specialized M&A advice investment banks are called boutique investment banks . The dominant rationale used to explain M&;A activity
3150-487: Is that acquiring firms seek improved financial performance or reduce risk. The following motives are considered to improve financial performance or reduce risk: Megadeals—deals of at least one $ 1 billion in size—tend to fall into four discrete categories: consolidation, capabilities extension, technology-driven market transformation, and going private. On average and across the most commonly studied variables, acquiring firms' financial performance does not positively change as
3240-534: The Hudson's Bay Company merged with the rival North West Company . The Great Merger Movement was a predominantly U.S. business phenomenon that happened from 1895 to 1905. During this time, small firms with little market share consolidated with similar firms to form large, powerful institutions that dominated their markets, such as the Standard Oil Company , which at its height controlled nearly 90% of
3330-551: The Massachusetts Employees Insurance Association (MEIA), following the passage of a 1911 Massachusetts law requiring employers to protect their employees with workers’ compensation insurance. The company was founded as a mutual company, a structure in which an insurance company is owned by its policyholders. The first branch office was opened in 1914, and later that year, the company wrote its first automobile insurance policy. The name
3420-551: The Royal Exchange to insure brick and frame homes. Initially, 5,000 homes were insured by Barbon's Insurance Office. In the wake of this first successful venture, many similar companies were founded in the following decades. Initially, each company employed its own fire department to prevent and minimize the damage from conflagrations on properties insured by them. They also began to issue ' fire insurance marks ' to their customers; these would be displayed prominently above
3510-602: The September ;11 attacks , a jury deliberated insurance payouts for the destruction of the World Trade Center . Leaseholder Larry A. Silverstein sought more than $ 7 billion in insurance money; he argued two attacks had occurred at the WTC. Its insurers—including Chubb Corp. and Swiss Reinsurance Co.—claimed the "coordinated" attack counted as a single event. In December 2004 the federal jury arrived at
3600-485: The U.S. Department of Labor . The court decided, based on the brief, that claims personnel are exempt "administrative employees" and not eligible for overtime pay. In late 2012, the Supreme Court of California depublished a contrary decision on the same issue. In 2012 and 2013, The Boston Globe published a series of articles concerning Liberty Mutual executives' excessive compensation and weekend trips using
3690-517: The United Kingdom , and Vietnam . (In the UK, Liberty Mutual acts as the insurer for Countrywide Legal Indemnities ). In the United States , Liberty Mutual remains a mutual company in which policyholders holding contracts for insurance are considered shareholders in the company. However, Liberty Mutual Group's brand usually operates as a separate entity outside the United States, where
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3780-509: The Consumer Choice Act (H.B. 1171). The bill would have trumped state regulation, and allowed Florida's biggest insurance companies to establish their own rates. Remarking upon State Farm's pullout from Florida, Ted Corless , a property insurance attorney who has represented large insurance carriers like Nationwide , noted "that homeowners are really going to have to look out for themselves". Five days after Crist vetoed
3870-404: The Consumer Choice Act, Corless defended property insurance deregulation by pointing out that "if the blue-chip insurance companies wanted to price themselves out of the market", then they would go out of business. He accused Crist of making choices on behalf of consumers, not protecting their right to choose. In 2006 the average Florida annual insurance premium was $ 1,386 for a homeowner, one of
3960-800: The Great Merger Movement were able to keep their dominance in their respective sectors through 1929, and in some cases today, due to growing technological advances of their products, patents , and brand recognition by their customers. There were also other companies that held the greatest market share in 1905 but at the same time did not have the competitive advantages of the companies like DuPont and General Electric . These companies such as International Paper and American Chicle saw their market share decrease significantly by 1929 as smaller competitors joined forces with each other and provided much more competition. The companies that merged were mass producers of homogeneous goods that could exploit
4050-651: The Liberty Mutual Research Institute for Safety studied the occupational safety and health of workers. Its scientific contributions include machine safeguarding guidelines, the Cornell-Liberty Survival Car and ergonomic guidelines that have informed the basis for national and international safety standards . More recently, the institute developed the Workplace Safety Index, an annual ranking of
4140-450: The acquiring company's stock, issued to the shareholders of the acquired company at a given ratio proportional to the valuation of the latter. They receive stock in the company that is purchasing the smaller subsidiary. There are some elements to think about when choosing the form of payment. When submitting an offer, the acquiring firm should consider other potential bidders and think strategically. The form of payment might be decisive for
4230-512: The acquisition so the team can focus on projects for their new employer). In recent years, these types of acquisitions have become common in the technology industry, where major web companies such as Facebook , Twitter , and Yahoo! have frequently used talent acquisitions to add expertise in particular areas to their workforces. Merger of equals is often a combination of companies of a similar size. Since 1990, there have been more than 625 M&A transactions announced as mergers of equals with
4320-458: The actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning , explosion, cyber-attack , and theft. Property insurance can be traced to the Great Fire of London , which in 1666 devoured more than 13,000 houses. The devastating effects of the fire converted the development of insurance "from
4410-404: The actual reconstruction value of the home. In case of a fire, household content replacement is tabulated as a percentage of the value of the home. In case of high-value items, the insurance company may ask to specifically cover these items separate from the other household contents. One last coverage option is to have alternative living arrangements included in a policy. If property damage caused by
4500-406: The allied perils. With multiple extensions, this policy not only keeps your property secure but also lessens the extent of the loss or damage that you may suffer causing a huge financial burden, and thus, it provides you relief from such anxiety. The risks covered are as follows: The following causes of loss are covered: The following are excluded from insurance coverage: Claims In the event of
4590-514: The assets and liabilities that pertain solely to the unit being sold, determining whether the unit relies on services from other parts of the seller's organization, transferring employees, moving permits and licenses, and safeguarding against potential competition from the seller in the same business sector after the transaction is completed. From an economic point of view, business combinations can also be classified as horizontal, vertical and conglomerate mergers (or acquisitions). A horizontal merger
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#17327918766634680-446: The business either through debt, equity, or a portion of both. Five common ways to "triangulate" the enterprise value of a business are: Professionals who value businesses generally do not use just one method, but a combination. Valuations implied using these methodologies can prove different to a company's current trading valuation. For public companies, the market based enterprise value and equity value can be calculated by referring to
4770-482: The buyer and target companies seeing positive returns. This suggests that M&A creates economic value, likely by transferring assets to more efficient management teams who can better utilize them. (See Douma & Schreuder, 2013, chapter 13). There are also a variety of structures used in securing control over the assets of a company, which have different tax and regulatory implications: The terms " demerger ", " spin-off " and "spin-out" are sometimes used to indicate
4860-469: The buyer. Hence, the analysis should be done from the acquiring firm's point of view. Synergy-creating investments are started by the choice of the acquirer, and therefore they are not obligatory, making them essentially real options . To include this real options aspect into analysis of acquisition targets is one interesting issue that has been studied lately. See also contingent value rights . Mergers are generally differentiated from acquisitions partly by
4950-810: The company began constructing the Liberty Mutual Tower , a 22-story skyscraper as part of a headquarters expansion project. The building received its certificate of occupancy in June 2013. In May 2017, Liberty Mutual Insurance completed its acquisition of Bermuda -based Ironshore Inc. from Fosun International Limited for $ 2.93 billion. In October 2019, Liberty Mutual acquired Nationale Borg, Nationale Borg Reinsurance and AmTrust Insurance Spain, which are credit and surety reinsurance subsidiaries of AmTrust Financial Services . In July 2021, Liberty agreed to acquire State Auto Group for over $ 2 billion. In August 2022, Liberty acquired AmGeneral Insurance Berhad,
5040-462: The company's current account), liquidity ratios might decrease. On the other hand, in a pure stock for stock transaction (financed from the issuance of new shares), the company might show lower profitability ratios (e.g. ROA). However, economic dilution must prevail towards accounting dilution when making the choice. The form of payment and financing options are tightly linked. If the buyer pays cash, there are three main financing options: M&A advice
5130-482: The company's fleet of five long-range corporate jets. In 2024, Liberty Mutual sent a questionnaire to homeowners of house 80 or more years old, requiring documentation of electrical rewriring, plumbing replacement, and elaborate burglar alarm systems. This may have been a successful attempt to shed minority insureds. LiMu Emu , a character that is represented using a real emu as well as through CGI , appears in some of Liberty Mutual's advertising beginning in 2019. LiMu
5220-469: The company's share price and components on its balance sheet. The valuation methods described above represent ways to determine value of a company independently from how the market currently, or historically, has determined value based on the price of its outstanding securities. Most often value is expressed in a Letter of Opinion of Value (LOV) when the business is being valued informally. Formal valuation reports generally get more detailed and expensive as
5310-579: The company, especially its name ("Liberty Bibberty" and so on). Various commercials are on a deck overlooking the New York Harbor with the Statue of Liberty in the background. Property insurance Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes , floods , nuclear incidents , acts of terrorism , and war. Named perils require
5400-420: The content analysis of seven interviews, the authors concluded the following components for their grounded model of acquisition: An increase in acquisitions in the global business environment requires enterprises to evaluate the key stake holders of acquisitions very carefully before implementation. It is imperative for the acquirer to understand this relationship and apply it to its advantage. Employee retention
5490-430: The control of the buyer modified. If the issuance of shares is necessary, shareholders of the acquiring company might prevent such capital increase at the general meeting of shareholders. The risk is removed with a cash transaction. Then, the balance sheet of the buyer will be modified and the decision maker should take into account the effects on the reported financial results. For example, in a pure cash deal (financed from
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#17327918766635580-454: The cost of repairing or replacing the property with like kind & quality regardless of depreciation or appreciation. Premiums for this type of coverage are based on replacement cost values, and not based on actual cash value. Actual cash value coverage provides for replacement cost minus depreciation . Extended replacement cost will pay over the coverage limit if the costs for construction have increased. This generally will not exceed 25% of
5670-405: The efficiencies of large volume production. In addition, many of these mergers were capital-intensive. Due to high fixed costs, when demand fell, these newly merged companies had an incentive to maintain output and reduce prices. However more often than not mergers were "quick mergers". These "quick mergers" involved mergers of companies with unrelated technology and different management. As a result,
5760-468: The efficiency gains associated with mergers were not present. The new and bigger company would actually face higher costs than competitors because of these technological and managerial differences. Thus, the mergers were not done to see large efficiency gains, they were in fact done because that was the trend at the time. Companies which had specific fine products, like fine writing paper, earned their profits on high margin rather than volume and took no part in
5850-473: The global oil refinery industry. It is estimated that more than 1,800 of these firms disappeared into consolidations, many of which acquired substantial shares of the markets in which they operated. The vehicle used were so-called trusts . In 1900 the value of firms acquired in mergers was 20% of GDP . In 1990 the value was only 3% and from 1998 to 2000 it was around 10–11% of GDP. Companies such as DuPont , U.S. Steel , and General Electric that merged during
5940-564: The highest in the country. In May 2022, Florida lawmakers have signed off on quick fixes to the state's property insurance crisis but critics say the plan pays little attention to the growing threat of climate change. Governor Ron DeSantis signed bipartisan legislation implementing the most significant and comprehensive property insurance reforms Florida has seen in decades to provide short- and long-term relief to Floridians to combat skyrocketing insurance costs. Fire insurance business in India
6030-487: The leading causes of the most disabling occupational injuries in the U.S. The institute's scientists conducted field and laboratory experiments to study the major causes of work-related injury and disability , publishing their results in peer-reviewed scientific literature . Institute findings are the basis for safety programs, recommendations and software used by Liberty Mutual loss-control consultants to help policyholders enhance worker safety. The institute’s work
6120-409: The limit. When obtaining an insurance policy, the limit is the maximum amount of benefit the insurance company will pay for a given situation or occurrence. Limits also include the ages below or above what an insurance company will not issue a new policy or continue a policy. This amount will need to fluctuate if the cost to replace homes in a neighborhood is rising; the amount needs to be in step with
6210-440: The long run by increased market share, broad customer base, and corporate strength of business. A strategic acquirer may also be willing to pay a premium offer to target firm in the outlook of the synergy value created after M&A process. The term "acqui-hire" is used to refer to acquisitions where the acquiring company seeks to obtain the target company's talent, rather than their products (which are often discontinued as part of
6300-891: The main door to the property in order to aid positive identification. One such notable company was the Hand in Hand Fire & Life Insurance Society , founded in 1696 at Tom's Coffee House in St Martin's Lane in London . The first property insurance company still extant was founded in 1710 as the Sun Fire Office and is now, through many mergers and acquisitions, the RSA Insurance Group . In Colonial America , Benjamin Franklin helped to popularize and make standard
6390-440: The merger. Mergers, asset purchases and equity purchases are each taxed differently, and the most beneficial structure for tax purposes is highly situation-dependent. Under the U.S. Internal Revenue Code , a forward triangular merger is taxed as if the target company sold its assets to the shell company and then liquidated, them whereas a reverse triangular merger is taxed as if the target company's shareholders sold their stock in
6480-429: The most value from a business assessment, objectives should be clearly defined and the right resources should be chosen to conduct the assessment in the available timeframe. As synergy plays a large role in the valuation of acquisitions, it is paramount to get the value of synergies right; as briefly alluded to re DCF valuations. Synergies are different from the "sales price" valuation of the firm, as they will accrue to
6570-417: The offer. Hostile acquisitions can, and often do, ultimately become "friendly" as the acquirer secures endorsement of the transaction from the board of the acquiree company. This usually requires an improvement in the terms of the offer and/or through negotiation. "Acquisition" usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will acquire management control of
6660-431: The ownership of companies , business organizations , or their operating units are transferred to or consolidated with another company or business organization. This could happen through direct absorption, a merger, a tender offer or a hostile takeover. As an aspect of strategic management , M&A can allow enterprises to grow or downsize , and change the nature of their business or competitive position. Technically,
6750-423: The past decade, including the high-profile acquisition of Safeco Corporation in 2008. Liberty Mutual agreed to acquire all outstanding shares of Safeco for $ 68.25 per share, for a total transaction price of approximately $ 6.2 billion. The result of this activity was an increase in revenue from $ 6 billion to over $ 30 billion in twelve years. In 1999, the company purchased Wausau Insurance Cos. Liberty Mutual created
6840-453: The plan was approved by voting policyholders around November 2001. Leveraging the greater flexibility of the mutual holding company structure, Liberty Mutual transformed from a single-line, highly regional insurer to one of the world's leading property and casualty insurance companies. Liberty Mutual's growth has been both organic and through acquisition . Early acquisitions were small, but Liberty Mutual has made several large acquisitions over
6930-572: The practice of insurance, particularly Property insurance to spread the risk of loss from fire, in the form of perpetual insurance . In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire . Franklin's company refused to insure certain buildings, such as wooden houses, where the risk of fire was too great. There are three types of insurance coverage. Replacement cost coverage pays
7020-446: The purchase price. These adjustments are subject to enforceability issues in certain situations. Alternatively, certain transactions use the 'locked box' approach, where the purchase price is fixed at signing and based on the seller's equity value at a pre-signing date and an interest charge. The assets of a business are pledged to two categories of stakeholders: equity owners and owners of the business' outstanding debt. The core value of
7110-446: The rewards for M&A activity were greater for consumer products companies than the average company. For the period 2000–2010, consumer products companies turned in an average annual TSR of 7.4%, while the average for all companies was 4.8%. Given that the cost of replacing an executive can run over 100% of his or her annual salary, any investment of time and energy in re-recruitment will likely pay for itself many times over if it helps
7200-448: The seller. Asset purchases are common in technology transactions in which the buyer is most interested in particular intellectual property but does not want to acquire liabilities or other contractual relationships. An asset purchase structure may also be used when the buyer wishes to buy a particular division or unit of a company that is not a separate legal entity. Divestitures present a variety of unique challenges, such as identifying
7290-442: The seller. With pure cash deals, there is no doubt on the real value of the bid (without considering an eventual earnout). The contingency of the share payment is indeed removed. Thus, a cash offer preempts competitors better than securities. Taxes are a second element to consider and should be evaluated with the counsel of competent tax and accounting advisers. Third, with a share deal the buyer's capital structure might be affected and
7380-414: The size of a company increases, but this is not always the case as the nature of the business and the industry it is operating in can influence the complexity of the valuation task. Objectively evaluating the historical and prospective performance of a business is a challenge faced by many. Generally, parties rely on independent third parties to conduct due diligence studies or business assessments. To yield
7470-490: The target company to the buyer. The documentation of an M&A transaction often begins with a letter of intent . The letter of intent generally does not bind the parties to commit to a transaction, but may bind the parties to confidentiality and exclusivity obligations so that the transaction can be considered through a due diligence process involving lawyers, accountants, tax advisors, and other professionals, as well as business people from both sides. After due diligence
7560-658: The topic brand architecture . Most histories of M&A begin in the late 19th century United States. However, mergers coincide historically with the existence of companies. In 1708, for example, the East India Company merged with an erstwhile competitor to restore its monopoly over the Indian trade. In 1784, the Italian Monte dei Paschi and Monte Pio banks were united as the Monti Reuniti. In 1821,
7650-547: The transaction and going down into detail about what to do about overlapping and competing product brands. Decisions about what brand equity to write off are not inconsequential. And, given the ability for the right brand choices to drive preference and earn a price premium, the future success of a merger or acquisition depends on making wise brand choices. Brand decision-makers essentially can choose from four different approaches to dealing with naming issues, each with specific pros and cons: The factors influencing brand decisions in
7740-406: The way in which they are financed and partly by the relative size of the companies. Various methods of financing an M&A deal exist: Payment by cash. Such transactions are usually termed acquisitions rather than mergers because the shareholders of the target company are removed from the picture and the target comes under the (indirect) control of the bidder's shareholders. Payment in the form of
7830-782: The world. As of December 31, 2021, Liberty Mutual Insurance had $ 156.043 billion in consolidated assets, $ 128.195 billion in consolidated liabilities and $ 48.2 billion in annual consolidated revenue. The company, founded in 1912, offers a wide range of insurance products and services, including personal automobile , homeowners , workers' compensation , commercial multiple peril, commercial automobile, general liability , global specialty, group disability, fire insurance and surety . Liberty Mutual Group owns, wholly or in part, local insurance companies in Brazil , Chile , China (including Hong Kong ), Colombia , Ecuador , India , Ireland , Malaysia , Portugal , Singapore , Spain , Thailand ,
7920-518: Was changed in 1917 to the Liberty Mutual Insurance Company and, through partnerships, the company began offering full-coverage auto policies. In 1964, Liberty Mutual Insurance Company began offering life insurance through its Liberty Life Assurance Branch. In 2002, the company converted into its current mutual holding company structure, which would allow it to offer stock while remaining a mutual company. The conversion
8010-499: Was controversial, as some policyholders believed the change would dilute their interest in the overall company, reduce their voting control, and limit their dividends. A lawsuit was filed, alleging that information provided to policyholders was misleading. Liberty Mutual settled the lawsuit in December 2001, which required additional disclosure and limited certain compensation to company officers and directors. Despite these concerns,
8100-612: Was non-proprietary and available to the public. The institute closed in May 2017. In 2006, Liberty Mutual employees in the Los Angeles area sued, claiming that the company had failed to pay their overtime salaries. They attempted to certify a class-action suit , but it was dismissed on technical grounds. In late 2012, the company won an appeal granting it the ability to not pay employees for work performed on an overtime basis. Liberty Mutual relied on an amicus brief filed on behalf of
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