Insight

Deal Risk Radar | Exit-ready insurance

11 May 2026
Insight

Deal Risk Radar | Exit-ready insurance

11 May

Dom Horton – Associate Director, Private Equity & M&A

Exit‑ready insurance: the overlooked value lever in private equity exits

Across the UK thousands of Private Equity backed businesses waiting to be deployed. But one area that is often overlooked is insurance.

Over the past decade, the number of UK private equity–backed companies waiting to be sold has increased from 1,700 to 2,700*. At the same time, pressure from limited partners (LPs) continues to rise. Around 70% of UK PE firms plan to increase investment this year* – but that depends on capital being returned from existing portfolio companies.

In short, exits need to move.

Private equity firms often overlook one of the fastest and least disruptive ways to protect value at exit.

 

How insurance risk builds quietly during the hold period

In most transactions, advisors review – and ideally restructure – insurance within the first 90 days after acquisition.
That’s often the last time an independent advisor looks at it properly.

Fast forward five or six years and the business has changed materially:

  • Revenue has more than doubled
  • Two bolt on acquisitions have been completed
  • A new overseas subsidiary has been created but never scheduled on the policies
  • Professional services have entered the revenue mix without matching professional indemnity (PI) cover

But the insurance programme tells a different story. Often it has been renewed annually, and left largely unchanged despite the rise in premiums. We find coverage has never been reassessed against how the business actually operates.

 

What happens when the exit process starts

When a business goes to market, buyers uncover insurance issues all at once.
  1. Buy‑side due diligence finds the gaps first

During due diligence (DD), buyers identify coverage gaps before the seller does. That immediately puts the seller on the back foot and raises broader concerns about governance and risk oversight.

  1. Warranty & indemnity insurance becomes restricted

Warranty & indemnity (W&I) insurers scrutinise the underlying insurance programme. Weaknesses often result in higher retentions, exclusions or carve‑outs on key warranties – risks that buyers will price into the deal.

  1. Value erodes

Material gaps create leverage. Buyers push for indemnities, escrow holdbacks or price reductions. In competitive auction processes, some deals never recover.

 

Why pre‑exit insurance due diligence matters

The solution is straightforward.

When sellers commission a pre‑exit insurance review 12–18 months before going to market, they take control before the data room opens

A robust review typically includes:

  • A full audit of the insurance programme against current operations
  • Benchmarking against buyer and W&I underwriter expectations
  • A clear gap analysis with time to remediate issues
  • A review of claims history, so nothing surprises buyers
  • In many cases, material cost savings

The cost is modest.
The time investment is limited.

And it is a fraction of the cost – financial and reputational – of trying to fix insurance issues under pressure at share purchase agreement (SPA) stage.

 

Insurance deserves the same discipline as financial due diligence

No seller would go to market without vendor financial due diligence (FDD).

Yet many firms still treat insurance as an administrative renewal exercise rather than a value lever.

If you have a portfolio company heading for exit in the next 12–18 months, now is the right time to pressure‑test the insurance programme – not six weeks before the investment memorandum (IM) is circulated.

 

Talk to Vista

Vista works with private equity firms to make portfolio companies exit‑ready, by reducing cost, closing coverage gaps and aligning insurance programmes with buyer and underwriter expectations.

If you would like a confidential conversation about a business in your portfolio that is approaching a sale process, we’re happy to help.

 

*https://www.grantthornton.co.uk/insights/private-equity-pulse-2026/

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