Paul Rose

Friday, 28 March 2003 10:53

Business buyer's market

If you are like most business owners, one of the last things on your mind in this economy is planning an acquisition.

After all, it's hard enough just to maintain sales, collect receivables and keep a lid on costs. But at the risk of adding to your growing list of things to think about, this is precisely the time to take a close look at doing a deal. Here's why.

First, an acquisition is a proven way to increase market opportunities, customers and sales. In may cases, it will provide an economy of scale that will reduce the cost of each product sold or service provided.

Merger and acquisition transaction volume has been down substantially the past two years. As a result, the cost of a possible acquisition target is lower than it was two years ago for the same company.

At the same time, the private equity community has significant capital to spend and is actively looking for deals in which to invest.

Absent a war in Iraq, signs are pointing toward an economic recovery in Western Pennsylvania. According to published reports, local businesses seem to be ahead of the national average in hiring plans, and financing is available to well-run companies with solid balance sheets. Banks and other lenders are beginning to actively court companies with strong credit histories, and interest rates are at record lows.

If the economy does rebound, it may well lead to a relative explosion in deal activity. When that happens, investment bankers have predicted that valuations will increase, as will the cost of capital.

While good deals are hard to find, it's worth the effort. The combination of fairly low seller valuation and expectation, with the relatively high availability of inexpensive financing, is just too good to ignore.

Waiting for full economic recovery may be too late, and could end up costing you even more. Richard D. Rose is co-chair of the Mergers and Acquisitions Practice Group of Buchanan Ingersoll. Reach him at (412) 562-8425 or

Tuesday, 26 November 2002 06:40

Late notice

The Ohio Ninth District Court of Appeals in September announced a decision that clarified the obligation of a policyholder to provide notice to its excess insurers.

In The B.F.Goodrich Company v. Commercial Union Ins. Co., et al., a case Brouse McDowell handled for the policyholder, the court made it clear that the duty to notify excess carriers can arise much later than the duty to notify primary carriers of the same claim.

The court observed, "The holder of a primary insurance policy typically has the duty to notify its insurer as soon as it realizes that it is liable ... " Contrastingly, "An insured's duty to notify its excess insurance carrier ... is not triggered until the insured has reason to believe that its ... liability will exhaust its coverage under its primary policies."

For a policyholder to have a notice obligation under an excess policy, therefore, the court noted, "It must have knowledge not only of potential liability but it must also have reason to believe that the extent of its liability will exceed the coverage limits of its primary insurance policy."

Although these principles generally are understood by insurance professionals and often find support in the express language of excess policies, before the Goodrich decision, there was little consideration of this issue by Ohio courts. The decision, however, squarely addressed the issue and significantly limited the ability of excess insurers to raise successfully "late" notice defenses.

In addition, the court reaffirmed that the "late" notice issue is typically one for the jury. It held that the trial court erred in granting summary judgment to the excess insurers in the face of evidence from the policyholder that notice was timely as to such insurers.

Particularly in regard to large claims such as the environmental claims at issue in Goodrich, insurers have incentive to raise as many issues as they can. "Late" notice may be raised with little or no justification under the law, which can be quite complex in regard to such matters.

As the Goodrich case demonstrates, courts sometimes take a very different view than do insurers.

Policyholders and their brokers, therefore, can be well served to seek the advice of experienced coverage counsel on such matters.

Brouse McDowell provides experienced counsel to policyholders, insurance agents and brokers on all aspects of insurance claims, insurance coverage disputes and insurance recovery. For additional information, contact Paul Rose in Akron at (330) 535-5711 or