Escrow Shield PlusSM represents an evolution in M&A corporate cash management
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June 23, 2015
NEW YORK and DENVER — Foreseeing how new regulations will impact the deposit and money market funds traditionally used as investment vehicles in mergers and acquisitions (M&A) transactions, AXA Equitable, a pioneer in financial protection, and SRS Acquiom, a leading provider of M&A post-closing services, collaborated to launch Escrow Shield PlusSM, an innovative investment alternative for escrow accounts designed exclusively for M&A.
“There has not been a lot of news around M&A escrows for decades. That is about to change,” said Paul Koenig, Co-CEO of SRS Acquiom.
“Under new regulatory rules, including Dodd Frank and Basel III, M&A parties may soon find that traditional escrow options may no longer meet their parties’ investment criteria, and may, in some cases, become unavailable altogether,” Koenig said. “Banks are pruning the types of deposits they take, and on what terms, due to increased collateral requirements. Foreseeing how these unprecedented changes would impact the cash management of merger parties, we united AXA Equitable’s asset management expertise with SRS Acquiom’s M&A post-closing experience to create Escrow Shield Plus, a breakthrough investment option for corporate cash with principal protection.”
The Escrow Shield Plus alternative investment strategy combines:
- a collateralized guarantee of principal from AXA Equitable,
- the opportunity for higher yields than traditional deposit or money market-type products,
- liquidity on demand for approved claims against the escrow, and
- premium service provided by SRS Acquiom.
New Regulations and Increased Risk to Merger Parties
According to Thomson Reuters, more than 40,000 M&A transactions, worth nearly $3.5 trillion, were announced worldwide in 2014. In a typical M&A transaction, roughly 10-20 percent of a deal's value is deposited into an escrow account upon closing, where it is generally held for 12-24 months. The deposit serves as a risk mitigation tool for the buyer in the event that a seller misrepresents certain facts about its business or fails to meet specific terms of the agreement. Funds are typically invested in money market deposit accounts, money market funds or treasury funds.
Following the 2008 financial crisis, regulations were put in place to mitigate systemic risks to the financial system. The result is a matrix of new rules governing financial institutions and asset managers, deposits and other cash management investment products.
"With more than 800 M&A transactions under its belt, SRS Acquiom was early to recognize the impact that changing regulations will have on M&A escrows and identified the need for a better approach. AXA Equitable has a 150-plus year history of developing solutions to meet new market needs, often teaming with leading companies to advance our industry," said Nick Lane, senior executive director of AXA Equitable and president and CEO of AXA Distributors, LLC. “This is the first time a major insurance company is entering the M&A business with an innovative investment strategy to provide merger parties with a way to manage escrow claims liquidity, obtain principal protection and the opportunity for enhanced yield."
Read more about these new regulations, the increased challenges they pose for merger parties, and the implications for M&A escrow funds in a white paper published by SRS Acquiom titled "New Regulations Will Shake Up M&A Escrow Landscape." Download the whitepaper here.
“AXA” is the brand name of AXA Equitable Financial Services, LLC and its family of companies, including AXA Equitable Life Insurance Company (NY, NY), MONY Life Insurance Company of America (AZ stock company, administrative office: Jersey City, NJ), AXA Advisors, LLC, and AXA Distributors, LLC. In business since 1859, AXA Equitable Life Insurance Company is a leading financial protection company and one of the nation’s premier providers of life insurance, annuity, and financial products and services distributed to individuals and business owners through its retail distribution channel, AXA Advisors, LLC (member FINRA, SIPC) and to the financial services market through its wholesale distribution channel, AXA Distributors, LLC.AXA S.A. is a Paris-headquartered holding company for a group of international insurance and financial services companies, including AXA Equitable Financial Services, LLC companies. AXA S.A. is a worldwide leader in financial protection strategies and wealth management with 103 million clients in 59 countries as of December 31, 2014. Find AXA on Facebook, Twitter and LinkedIn. For more information, visit axa.com.
About SRS Acquiom
SRS Acquiom provides innovative M&A post-closing services that deliver better economics with unprecedented ease and efficiency for buyers and sellers.
Services include industry-leading shareholder representation, escrow investment and payments administration. Our innovations in escrow solutions are utilized in a broad array of transactions, including mergers and acquisitions and insurance. Since creating professional shareholder representation in 2007, SRS Acquiom continues to transform the industry, having introduced Acquiom Clearinghouse™, the first and only online payments platform, Acquiom® Compensation Solutions, a service for processing payments treated as taxable compensation, and Escrow Shield PlusSM, a ground-breaking escrow investment option based on a unique patented method. As the global leader, SRS Acquiom represents more than 80,000 shareholders in 95 countries and has been engaged on 800 transactions valued at $130 billion. Annual data studies and publications are widely used to shape industry best practices.
Securities offered through Acquiom Financial LLC, member FINRA/SIPC and an affiliate broker-dealer of SRS Acquiom LLC. Escrow Shield Plus is not available in all states. Acquiom Financial LLC does not make recommendations, provide investment advice, or determine the suitability of any security for any particular person or entity. Acquiom®, SRS®, and Acquiom Clearinghouse™ are registered trademarks or trademarks of SRS Acquiom LLC or its affiliates. All other logos, company names or product names are trademarks or registered trademarks of their respective owners. Escrow Shield Plus is issued by AXA Equitable Life Insurance Company (NY,NY). Guarantees are based on the claims-paying ability of AXA Equitable Life Insurance Company.