Home | Business News | Browse by Publication | B | Best's Review

Then there was one: when companies merge, blending their risk management operations requires planning, foresight and tough choices.

Article Excerpt
The June takeover of Caesars Entertainment Inc. by Harrah's Entertainment Inc. forged the largest casino operator in the world. Months before the deal was completed, the companies were bringing in consultants to evaluate their separate risk-management programs and report to each team on their findings.

It's all part of the drill in cases like these. For, behind the scenes of mergers and acquisitions, many people work long and hard to make sure all exposures of the newly formed company will be identified and covered well before the transaction becomes final.

"In our situation, it wasn't a case of who had the right program and who had the wrong program," said Lance Ewing, formerly Caesars vice president of risk management and now the man tapped to run the new gambling giant's risk-management operation. "There were many great things that Harrah's had in their risk management department and there were some very, very good things that we did well at Caesars. The idea was how do we put the two of those together in order to make what a new $9 billion dollar company is going to need?"

During the months leading up to a merger, the participating companies will often run on parallel tracks until they reach a definitive insurance policy date, Ewing said. Then a decision must be made on extending the current policy date to meet the new renewal date, he said. "You can prorate certain policies. Hypothetically, one company might have a June 1 renewal and the company being acquired has a Dec. 31 renewal," Ewing said. "What you do is extend from the June 1 to the Dec. 31 renewal and get that extension through the carriers. That's no easy task by any stretch of the imagination."

Then...

View this article FREE - Now for a Limited Time, try Goliath Business News
Free for 3 Days!