Preserving Value: Overcoming Customer Retention Risk Through Adept Advocacy

Castle Harbour secured full RWI coverage for a financial sponsor despite a missing contract renewal with the target’s largest customer.

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Castle Harbour was engaged by a financial sponsor acquiring a business services company. A significant challenge emerged during diligence when it was discovered that the target’s largest U.S. contract lacked a fully executed renewal, raising concerns about customer retention generally and revenue stability post-closing.

Leveraging its experience in complex customer risk scenarios, Castle Harbour worked closely with the client and deal counsel to create a tailored diligence strategy designed to assuage underwriter concern and avoid an exclusion. By gathering targeted supplemental evidence of the customer relationship at issue, Castle Harbour engaged in effective advocacy with the RWI underwriters to provide full coverage for customer contracts without the need for any exclusion. This strategic advocacy preserved coverage for a material portion of the target’s enterprise value and enabled the buyer to proceed with confidence, maintaining deal terms without the need for renegotiation.

Policy type: Buyer-side RWI
Size: $500MM - $1B
Sector: Business Services

Buyer type: Financial Sponsor
Buyer jurisdiction: U.S.
Seller jurisdiction: U.S.