Kelso-backed Risk Strategies buys M&A insurance provider Krauter & Co.

  • Risk Strategies has made many acquisitions since Kelso invested
  • Kelso first invested in 2015
  • Neil Krauter will use proceeds to invest in PE funds

Kelso & Co-backed Risk Strategies acquired Krauter & Co, which specializes in working with private equity firms and their portfolio companies providing due diligence and transactional risk products, the firm said in a statement.

How much Risk Strategies paid for Krauter & Co, formed in 2004 by Neil Krauter, is unclear. Krauter will continue to lead the business and will be one of four executives reporting to Risk Strategies CEO Mike Christian.

Krauter & Co works with more than 185 PE firms and thousands of portfolio companies, the statement said.

Prior to forming Krauter & Co, Neil Krauter worked at Aon, where he rose to vice chairman and led the company’s global M&A private equity group.

He also was executive vice president at Marsh & McLennan, responsible for its PE practice.

Krauter said he planned to use proceeds to invest in PE funds, tripling its exposure over the next two years. The Krauter family currently has investments in 14 funds, he said.

Kelso acquired a majority of Risk Strategies in 2015 from Kohlberg & Co. Since Kelso invested, Risk Strategies completed at least 11 strategic acquisitions targeting new specialty practices, geographic expansion and tuck-ins to existing practices, according to Kelso’s website.

Last year Kelso hit the market with its 10th flagship fund, targeting $2.5 billion. Fund X had raised about $2.1 billion as of earlier this month, according to a Form D filing.

Reps-and-warranties insurance is purchased by buyers to protect against losses resulting from breaches of representations by sellers in acquisition agreements.

“By shifting the risk of such losses from the seller to an insurer, the buyer and seller can limit or even eliminate the seller’s liability for certain rep breaches, all without materially diminishing the buyer’s coverage,” according to a 2017 article from Gibson, Dunn & Crutcher.

Action Item: Check out Kelso’s Form ADV here: