- change ups
Hylant launches private equity due diligence, M&A practice
The Toledo company’s Grand Rapids office has grown to 30 employees since it opened in 2006.
Hylant, one of the nation’s largest privately owned insurance brokerage firms, has launched a new Private Equity Due Diligence, Mergers & Acquisitions practice, according to an announcement from its CEO, Michael Hylant, in Toledo.
The company’s new practice group will assist clients in business transactions by focusing on minimizing risk and maximizing value.
According to Hylant, its professionals now offer support for all phases of the merger and acquisition process for small to mid-sized businesses and enterprise-level corporations with multiple business units.
The group’s professionals leverage data and analytics to determine a deal’s strengths, weaknesses and risks, and can recommend arrangements that will help facilitate a deal.
Hylant advises its clients to minimize exposure while maximizing the value of a target merger, acquisition, divestiture, public-to private partnership, commercial loan or structured financial transition.
“We are leveraging our specialists by combining the best private equity and insurance industry expertise and experience with proven processes and proprietary technology,” said Hylant.
Risk management firms like Hylant are in a prime position to be able to provide valuable counsel in mergers and acquisitions, because it is Hylant’s job to know what all the risks and presumed outcomes are for a given business, in order to determine just what kind and amount of insurance coverage is best.
“Larger companies don’t buy insurance like we homeowners do,” said Greg Nemmers, president of Hylant’s office in the Waters Building in downtown Grand Rapids.
Because of the substantial cost of commercial insurance, companies with $50 million or more in annual revenue are usually willing to consider a form of self-insurance, which involves retaining some of that revenue in reserve — sort of like your grandmother’s rainy day fund.
“It’s less costly to self-insure, particularly if you have controls in place,” said Nemmers.
But self-insurance isn’t a random process. Companies considering it need a professional insiders’ knowledge and expertise that companies like Hylant have acquired over the years.
Hylant is now focused specifically on private equity firms as clients because these firms are in the business of acquiring companies, many of which are already familiar to risk management companies. Firms like Hylant are able to make private equity clients fully aware of the risk they are assuming and let them know how much insurance they need to buy and how much capital should be held in reserve at a new acquisition as self-insurance.
“Minimize the risk” and “take the cost out” are expressions frequently used by risk management professionals like Nemmers.
“And it’s not just on the risk management side” regarding unforeseen losses, said Nemmers. There are also expensive issues related to employee benefits.
“Employee benefit plans are highly costly at this point in time,” he said, so Hylant works to find ways to reduce that cost for private equity firms considering an acquisition.
Risk management is “a pretty robust, competitive marketplace,” according to Nemmers, with Hylant competing against major publicly held insurance brokers such as Wells Fargo.
Nemmers has lived in Grand Rapids for about 20 years, and joined Hylant when the company opened an office here in 2006. The firm is growing and is now at about 30 employees here, according to Nemmers.
The direction the economy is going is always a prime consideration in risk management, and Nemmers takes an optimistic outlook in that regard.
He said he has been hearing that the employment numbers indicate the national economy isn’t growing at the pace that was generally anticipated, but West Michigan may be different.
“It seems to me that we are seeing more growth here in West Michigan than (the national level), and certainly in the auto sector — it’s just going gang busters right now. At least, that’s my take on it,” he said.
He added that some of the other industries that are prominent in West Michigan, such as health care and life sciences, “never did get hurt too bad” in the economic downturn.