M&A Advisory

Reflecting on the 2008 Financial Crisis + Proactive Solutions for the Future

The start of 2019 marks over a decade since the Financial Crisis of 2008 wreaked havoc on the U.S. financial system and ignited the Great Recession. Ten years ago, Americans were dealing with the aftermath of the housing bubble burst and stock market crash while multi-billion-dollar bank bailouts and stimulus packages were moving through Congress. As an insurance and benefits advisor for private equity firms during the 2008 crisis, I took note of some valuable lessons from that tumultuous time that are worth sharing.

In my new series for the Newfront Blog, I will highlight some of the most important things my private equity clients learned about insurance and human capital concerns in the aftermath of the financial crisis. I’ll outline proactive, practical solutions and tips to help prevent the worst effects of future crises.

When the recession hit, my private equity clients shifted their focus from closing new platform deals to managing operational issues at their portfolio companies. Because insurance at portfolio companies is something that private equity professionals typically don’t pay close attention to after the initial acquisition, I received a flood of panicked questions when it was clear that the economy was going from bad to worse.

After fifteen years serving this space, there is a great deal of anecdotal evidence that suggests that the lessons I will share in the coming weeks won’t come as a surprise to private equity executives. In the time since the Great Recession, the application of insurance products in acquisitions has evolved, insurance brokers are expected to provide consistent and robust coverage with key policies, and the day-to-day role that a private equity firm plays with human capital challenges at portfolio companies has expanded.

Although dramatic financial crises like the 2008 recession are unpredictable, I believe that there is real value in recalling what my private equity clients were asking and applying that knowledge to prevent the more devastating impacts of future market turns.

Check back next week for the first installment in this series, where I’ll discuss how portfolio companies can mitigate significant accounts receivable exposure with struggling customers.

Josh Warren
The Author
Josh Warren

Senior Vice President

Josh is a Senior Vice President and M&A Advisory Practice Leader of Newfront Insurance and Financial Services. His responsibilities include operational leadership, client management, program design, and risk analysis for alternative asset managers and Newfront clients facing a merger or acquisition.

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