Aon Risk Solutions
Aon Health & Benefits Solutions for Private Equity
Risk. Reinsurance. Human Resources.
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Aon Health & Benefits Solutions for Private Equity
Solutions throughout the lifecycle of your investment
Aon Risk Solutions
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Working with you every step of the way
Human Capital Due Diligence We work with our private equity clients to address the critical "deal breaker" and "deal shaper" issues affecting your transaction. We immediately bring to your attention any red flag issues and provide solutions to remedy these matters.
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New Client Onboarding After the deal closes, we utilize knowledge gained during due diligence to help you implement the programs to meet your goals. We work to ensure a smooth transition to minimize employee disruption, while helping to revamp the HR and Benefits strategy to achieve your objectives.
Portfolio Solutions We have develped several proprietary solutions to help manage costs for our private equity clients. These include leveraged purchasing arrangements available because of Aon’s market volume. We work with our private equity clients to help them determine the appropriate strategies to manage individual companies as well as their entire portfolio.
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Aon Health & Benefits Solutions for Private Equity
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Exit-Ready Strategy We understand that there is a lifecycle to the ownership of every investment. We work to ensure that each of your portfolio companies is exit-ready with respect to the HR programs. This means optimizing the plan costs, designing the plans as efficiently as possible, minimizing risk, and ensuring compliance.
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Due Diligence Successful diligence outcome
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Welfare plans
Aon completes a thorough review of the active and retiree health and welfare plans. Specifically, we examine current and future costs, ACA compliance issues, participation and employee contribution levels.
Pensions/Retirement
Our review includes company-sponsored retirement programs and multi-employer pensions. We provide an actuarial analysis of pension plans to determine the funding and accounting costs.
Unions/Workforce
We review collective bargaining agreements to determine how the benefits are administered. We also review employee agreements, severance plans, and other employment matters.
Compensation/Executive benefits Retaining the right executives is key to the transaction. We review deferred compensation, equity awards, and other executive plans.
Global benefits
Over 80% of our engagements include a review of global welfare and retirement plans. We routinely perform due diligence across the globe in all areas of HR and benefits.
Purchase agreement and legal documents
We partner with your legal counsel to review the purchase agreement and other transaction documents. We advise on pension terms and other best practices relating to the human capital in the deal.
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Onboarding Establishing Your Human Capital Programs 1. Transaction structure dictates strategy • Carve-out transaction: Design and implement the new HR programs while ensuring that the plans comply with the requirements of the purchase agreement • Add-on acquisition: Determine the pros and cons of maintaining separate vs. consolidated programs • Stock purchase: Assume the current plans at closing and determine the go-forward program • Asset purchase: Determine the HR assets that will be assumed, and those that will be left behind • Merger: Assess consolidation opportunities and the appropriate combined program 2. Understanding your costs • Analyze costs based on acquisition structure and contemplated changes • Determine budgets for the new company and design programs that meet those budgets while maintaining the proper risk tolerance 3. Implementation leadership Aon provides implementation support for all of your HR programs such as • Employee communications • Payroll • Retirement plans • Compensation • Talent • HR technology • Executive benefits • Welfare plans
Our approach 01 Discover
Understand your goals and strategy for the new company
03 Deliver
We implement the program for your new portfolio company
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Aon Health & Benefits Solutions for Private Equity
02 Develop
Build a program that will accomplish your objectives
04 Determine
Monitor the program with you and the management team
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Portfolio Solutions Aon's Proprietary Cost-Savings Tools Rx Coalition
Aon's Strategic Savings •
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Corporate Exchange
Twenty-five point diagnostic of existing benefits offering designed to identify high, medium and low areas of optimization
Structured Portfolio Solutions
Discount Database
Typically identify between 5% and 15% savings on overall benefits spend
Pharmacy Coalition • Proprietary Aon Pharmacy Carve Out solution • Leverages 1M members and over $1B in pharmacy spend • Generates an average Rx savings of 11% (Rx spend is typically ¼ of the total medical cost) Structured Portfolio Solution (SPS) • Proprietary Aon solution for ancillary benefits (e.g. dental, life, disability, stop-loss) • Leveraged purchasing with panel of best in class carriers • Average savings of 15% below current spend with market leading coverage enhancements and terms/conditions Discount Database • Provides the relative cost competitiveness of the negotiated provider reimbursements • Compares network-to-network discounts allowing you to review the most competitive options for each employee location Corporate Exchange • Employers: Trend mitigation through best-in-market contracting • Employees: Superior benefits shopping experience • Carriers: Market share opportunity (and risk)
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Exit-Ready Strategy Maximizing Your People Investment
Exit-Ready strategies help improve the attractiveness of the HR program to a potential buyer
Aon solutions Benchmarking: We provide best in class benchmarking allowing for the portfolio company to model benefits packages against peer companies. Wellness: Aon assists our private equity clients in developing wellness programs that drive better employee health decisions; translating into benefits cost savings. Employee Communications: During the time prior to exit, Aon develops employee communications outlining upcoming changes to minimize disruption. Compliance Dashboard: Web-based system for monitoring and tracking benefit plan compliance. Compliance Dashboard can help ensure that the appropriate HR policies are updated, thus avoiding surprises during the sale of the business. Aon Employee Advocacy: Aon provides a call center for plan participants to receive help with various HR and benefit questions. This provides advocacy services for participants while relieving the HR staff of a large volume of employee calls. Dependent Eligibility Audit: An audit of dependent eligiblity ensures that only eligible participants are provided benefits under the welfare plans. This ensures a compliant plan as well as benefits cost savings. 6
Aon Health & Benefits Solutions for Private Equity
Working with Aon Dedicated Resources for Private Equity
Largest HB Broker
Integrated Approach
Dedicated PE Practice
Middle Market Expertise
Global Team
As the largest health & benefits broker, we bring our market knowledge, leverage and innovation to our private equity clients
We are the only firm with a truly integrated team of professionals across Benefits and Risk
Our M&A group has over 200 professionals dedicated to working in the private equity space
Over 80% of our deals in 2015 were for portfolio companies with 100-3,000 employees; we specialize in middle market business
Our M&A practice has offices in over 20 countries. We seamlessly managed over 1,000 global projects in 2015
Our credentials •
30 years continuous commitment to providing diligence advice and portfolio company support to private equity clients
• Provided consulting services to over • Located in
260 PE Clients in 2015
29 cities globally
• Supported by
200 dedicated transactional professionals worldwide including MBA’s,
attorneys, actuaries, as well as former risk managers, underwriters, claims adjusters, and management consultants • Completed over
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5,000 diligence assignments globally over the past five years
47% resulted in Aon providing ongoing support to the portfolio company Aon Risk Solutions
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Aon health & benefits practice Utilizing our market leverage to save you money United States We provide advice to clients on how to direct more than
Aon’s team of 1,100 U.S. health care experts includes specialized actuaries, physicians, clinicians, pharmacists, attorneys and consultants. Our Health & Benefits capabilities include •
Strategy and design
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Financial/actuarial consulting
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Vendor management, renewals, etc.
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Wellness and health transformation
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Plan performance and benchmarking
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Compliance and legal consulting
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Clinicial and claims audits
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Data warehouse and analytics
$100B in annual health care spend
$50M
annually to develop solutions that redefine health & benefits for greater choice, affordability, and wellness on behalf of our clients
We consult with
40% of the Fortune 500
Global human capital practice Our Private Equity clients constantly confront new challenges as they seek to globalize and expand, particularily with respect to how they support their global workforce. Aon has organized a systematic way of supporting multinational corporations in their global benefits efforts. Our efforts have the potential to lead our clients to a reduction of up to a third of total direct and indirect spend on benefits •
8%-12% as a result of moving from an unpooled situation to complete, actively managed multinational pooling
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3%-5% from enhanced governance and harmonization
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3%-7% from the use of captives
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3%-6% from using one broker globally to optimize premium and commission spend
Our global approach We address global benefits objectives through three core elements •
Service as the local broker/consultant to subsidiary management (Aon is positioned to do this in over 100 countries with wholly owned operations delivering locally appropriate employee benefit services)
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Organizing a structured and disciplined approach and process with distinct client service tools and protocols in a manner that is well understood and accepted by HQ and subsidiary management alike
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Deploying active global relationship management and delivering insightful stewardship that goes beyond simply reporting data by correlating the data agains corporate business, financial, and risk management goals
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Aon Health & Benefits Solutions for Private Equity
Aon Strategic Advisors & Transactions Solutions (ASATS) Our Health & Benefits Solutions are part of the ASATS practice, which includes:
Business transformation
Risk & Benefits diligence
Transaction liability solutions
Corporate investigative solutions
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New business realities–whether it’s rapid technological changes, aggressive industry consolidation, constraining governmental regulations, increasing cost pressures, or challenging talent dynamics–require organizations to reassess their business strategies and operating models to ensure they are structured effectively to be nimble in order to change with the global business environment
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Aon’s approach to organizational transformation is systematic, fact-based and, uniquely, human capital centric, enabling us to work with our clients to think ahead and identify the practical steps needed to operationalize and implement the changes
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We employ our proprietary framework to drive real business results, and our engagements leverage our expertise, tools, and methods on organization design to go beyond just the “lines and boxes”
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Our Risk and Health & Benefits diligence teams work side by side in deal time to deliver the highest quality product, while minimizing stress on the Target’s management team
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Our team will identify issues and offer solutions that can impact your purchase price and return on investment. We develop mitigation strategies and options to cap or transfer known liabilities
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Comparison of the current total cost of risk and total compensation for the target and the expected costs for NewCo post-closing, including change in control costs and benchmarking
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Through a Representations & Warranties (R&W) Insurance policy, buyers and sellers can insure all or part of the liability that might arise from breaches of representations and warranties, rather than solely looking to seller indemnification
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For buyers, a R&W policy can be an attractive alternative when the seller is resistant to a higher indemnity cap or has limited resources to fund its indemnification obligations
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Similar to a R&W policy, a Tax Indemnity policy can be an effective tool to help facilitate transactions by providing certainty with respect to the treatment of a particular tax matter
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Aon’s specialists are highly experienced in obtaining, analyzing, and reporting critical information
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Our diverse suite of investigative services can be applied to all stages of the litigation or transactional process
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Due diligence of key hires, potential board members, management; corporate and individual parties involved in joint ventures, mergers, and acquisitions
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Proxy fight and hostile takeover defense support
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Research in support of litigation (e.g., expert witness vetting, asset research, etc.). Internal investigations involving allegations of fraud, harassment or corporate malfeasance
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About Aon Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/ manchesterunited to learn about Aon’s global partnership with Manchester United. © Aon plc 2016. All rights reserved. The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Aon contacts Brian Cochrane EVP, M&A Solutions
[email protected] t: 312.381.3238 Ann Gelfand Global Managing Director, M&A Solutions
[email protected] t: 314.719.5187 Robb DeGraw Senior Vice President, M&A Solutions (H&B)
[email protected] t: 314.719.3828 www.aon.com
Risk. Reinsurance. Human Resources.
