Strang & Associates

No matter what your problem:

CASE STUDY No. VII

Situation:

A manufacturer acquired a bus manufacturing operation. The purchase agreement transferred all responsibility for these buses to the purchaser.

Problem:

These vehicles were "extended" buses that used a connecting device (trussel) between the first and second unit. Shortly after the acquisition, the purchaser discovered cracks in the trussels makeing it necessary to suspend all operations until the trussel was redesigned.

Because all responsibility for products liability transferred to the purchaser, they paid over $5,000,000 in redesign and repair costs due to a flaw they did not create.

Solution:

A risk management assessment, before closing the deal, identifies these types of frequently overlooked risks.

Benefits:

A review of the purchase agreement, prior to closing, by an experienced risk management consultant eliminates the assumption of unwanted risks because the purchaser has gained critical information.

The purchaser negotiates with additional strength and makes the right decisions for his/her company based on all the facts.

CASE STUDY No. XII

Situation:

An aerospace manufacturer experienced problems obtaining products liability insurance because a subsidiary manufactured small aircraft. As a result, the manufacturer self-assumed the first $100,000,000 of this substantial exposure. Many of the company's quarterly and annual reports contained information regarding this growing financial liability for products claims.

A new owner acquired the subsidiary and elected not to purchase products liability insurance, although an estimated $35,000,000 of claims had accumulated during the annual period immediately prior to the purchase ($45,000,000 was the highest aggregation of claims during one annual period).

Problem:

Within a few years, judgments against the former subsidiary from products liability claims escalated to over $15,000,000, forcing the new owner into bankruptcy.

Solution:

A risk assessment pinpoints uninsured exposures, (in this case the lack of products liability insurance), and highlights the significance of an aircraft manufacturer not carrying this type of insurance.

Benefits:

Professionals (investment bankers, attorneys, CPAs) reduce investors' and lenders' risk of financial loss by including a risk management assessment as part of their due diligence process.