BY: KRISTEN DRAKE
When acquiring or managing a company, what you don’t know about a company’s past can limit your options, reduce your assets, and potentially expose you to financial risk.
It’s often said that ignorance is bliss. But, when valuable information about a business’s history has been destroyed or discarded, ignorance is…Risk. Can that institutional knowledge be regained? Yes! PolicyFind specializes in reconstructing corporate histories to mitigate the financial and legal risks of M&A, property transactions, and legacy claims involving bodily injury.
REVEALING THE PAST WITH CORPORATE HISTORY RECONSTRUCTION
This intricate process can resemble unraveling a knotted ball of yarn. While each investigation is different, there are core similarities. Our investigators and researchers begin by interviewing key personnel/stakeholders and/or their legal representatives to learn what is known about the entity’s background.
Next, we request to gather additional information contained within the organization’s archives to identify additional leads to potentially pertinent historical information. Our interest is to gather historical data from three main sectors: financial, legal, and contractual.
After this process, if information gaps still exist, PolicyFind reviews documents within public repositories, including, but not limited to, Articles of Incorporation, state filings, maps, environmental reports, and property records.
These critical yet often overlooked steps aim to identify the correct entity or entities responsible for a long-tail or legacy liability claim and/or which entity has rights to the lost or mislaid liability occurrence-based policies in force when bodily injury or property damage may have occurred.
If corporate history research and reconstruction are not performed correctly, the potential consequences include financial losses or legal issues.
HOW DOES CORPORATE HISTORY RECONSTRUCTION MITIGATE FINANCIAL AND LEGAL RISKS IN M&A AND PROPERTY TRANSACTIONS
Corporations acquiring current companies may also inherit liabilities from past practices.
In today’s corporate landscape, mergers and acquisitions (M&A) are commonplace. In fact, according to the Institute for Mergers, Acquisitions & Alliances, since 2000, more than 790,000 transactions have been announced worldwide.
Much has changed since the first corporate acquisition wave in the United States, which occurred between 1897 and 1904 (Wiley Online Library). Today, buyers and sellers can type keywords into an AI search engine and find hundreds of sites dedicated to offering best practices and due diligence checklists containing guides to acquiring documentation such as capital assessments, operations evaluations, inventory reports, and capacity analyses.
The same holds for real estate transactions involving environmental risk and long-tail or legacy liability claims dating back decades.
Even with so much information at our fingertips, some key data points have been lost with time.
An assessment of the insurance assets the acquiring company takes from the target company is an essential component of the acquisition process. It can make or break a deal where future liabilities are likely to emerge.
HOW DOES CORPORATE HISTORY RECONSTRUCTION MITIGATE PROPERTY DAMAGE CLAIMS
PolicyFind routinely works for real estate investors and developers. In these cases, it is commonplace that very little background information is known about a property’s historical ownership, let alone, operations. Further, at the inception of many of these types of investigations, PolicyFind frequently learns that no historical documentation exists. Perhaps the former owner was the sole proprietor and passed away decades ago. In these instances, our insurance archaeologists are tasked with revealing the full scope of the property’s ownership and operational history.
Once this information is brought to light, the search for those entities’ liability insurance can begin.
Armed with little more than an address, PolicyFind researches to identify Potentially Responsible Parties (PRPs) and then begins the arduous task of locating associated historical general liability policies.
HOW DOES CORPORATE HISTORY RECONSTRUCTION MITIGATE BODILY INJURY CLAIMS
When a lawsuit is filed against a school district for the acts of a bad actor dating back to the 1970s or 1980s, one of the first components an insurance archaeologist must uncover is the district’s naming convention at the time of the alleged wrong doing. While this may seem simplistic, it is common for public entities’ names to change throughout time. Learning how public entities insured themselves, and under which nomenclatures is vital. Moving a claim forward to defense or indemnity is impossible without this information.
Corporate History Reconstruction has a myriad of applications. It is common to employ these practices to mitigate risk in lawsuits arising from illnesses related to exposure to asbestos, silica, or talc.
CONTACT POLICYFIND
PolicyFind specializes in reconstructing corporate histories to mitigate the financial and legal risks of M&A, property transactions, and legacy claims involving bodily injury. Contact us today for a free consultation.