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David Barnes participates in COVID-19 related M&A Panel:

Mar 27, 2020

Recap of CAC Specialty’s Participation in COVID-19 Related M&A Panel:

Yesterday, CAC Specialty’s David Barnes, Senior Vice President Transactional Liability, was a panelist on a special webinar titled: Coronavirus: Impact on and Outlook for M&A, along with:

  • Jim Rosener, Head of International Practice Group, Pepper Hamilton
  • Elaine Carey, Managing Director, FTI Consulting
  • Jaco Sadie, Senior Managing Director, FTI Consulting
  • Alex Kasdan, M&A and Restructuring, DelMorgan & Co.

Here are some key takeaways from the panel’s discussion:

M&A Activity Will Slow Down…

  • Private equity sponsors, serial acquirers, and lenders don’t like uncertainty. These rough waters, especially for those sensitive to market behavior, have forced even parties under LOI to push pause, at least temporarily.
  • The deals that move forward will likely move slower. Travel restrictions continue to limit physical diligence and pose other logistical challenges.

… But an M&A Recovery Will Happen

  • Opportunities will arise.
    • Look for sellers to carve out underperforming areas of their business to get a short-term cash infusion.
    • And look for some buyers to capitalize on newly price-adjusted targets.
  • Barring serious or sustained liquidity problems, pent-up demand coupled with private-equity dry powder will lead and revive the flow of M&A transactions. And some well-positioned firms will look to capitalize early.
  • The recovery should be broad based: large deals will continue to happen, the middle-market will remain strong, and even sectors and industries hardest hit by coronavirus will see distressed transactions.
  • Once transactions resume, expect to see heightened due diligence, especially on supply chain resiliency, financial statements, and adequacy of reserves.

How Is Coronavirus Impacting Representation & Warranty Insurance Pricing, Coverage and Underwriting?

  • CAC Specialty is seeing all underwriters incorporate coronavirus-related exclusions or coverage limitations.
  • Some propose more broadly excluding a wide swath of any losses arising out of or resulting from the pandemic.
  • Others have taken a more nuanced approach that will look at implications in the particular transaction and try to limit the exposure accordingly.
  • Underwriters reasonably don’t want to cover losses directly arising from the pandemic (a “known” risk), but it’s important to avoid wording that excludes losses that would have occurred, and been covered, in the absence of the pandemic.


In other news:

The Markets:

The DJIA closed yesterday at 22,552.17, capping a three day gain of more than 21%. The markets opened lower this morning.

SEC’s Division of Corporation Finance Issues COVID-19 Related Disclosure Guidance

The SEC’s Division of Corporation Finance provided additional guidance to companies regarding the need for the proper and complete disclosure of COVID-19 related business risks. The Division’s guidance described “…how companies should assess and communicate COVID-19 risks, (and) encourage(ed) firms to be proactive and revise their filings accordingly.” Please see for the detailed guidance and list of questions to consider.

The French Laundry’s Owner Demands Coverage for COVID-19 Related Losses

David Keller, the famed chef of the French Laundry and its sister restaurant Bouchon Bistro, filed suit against the restaurants’ insurers, demanding that they be held responsible for COVID-19 related business interruption losses. The complaint alleges that the policies provide coverage for “’…the actual loss of business income sustained and the actual, necessary and reasonable extra expense incurred when access to (a restaurant) is specifically prohibited by order of civil authority…’” For those of you who have had the pleasure of dining at one of Mr. Keller’s restaurants, you no doubt have had an amazing culinary experience that, when the bill came, hit your wallet, big time. It follows that the loss of business income to these establishments will be larger than the losses sustained by other similarly sized restaurants.



  • Coronavirus (COVID-19), CF Disclosure Guidance: Topic No. 9,, March 25, 2020
  • Jack Queen, SEC Staff Offers Road Map for COVID-19 Risk Disclosures, Law 360, March 26, 2020.
  • Gavin Souter, Famed restaurant sues Hartford for coverage after forced closure, Business Insurance, March 26, 2020
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