Management Liability - Merger and Acquisition (M&A – W&I)

Merger and Acquisition or ‘Transactional Risk Insurance’ is an umbrella term which encompasses Warranty and Indemnity insurance, tax insurance and contingent risk insurance.

W&I

• Indemnifies the insured for financial loss for a  breach of warranty or the tax covenant in an M&A  transaction.
• Covers loss or liability arising from unknown orundisclosed matters only.
• Can be purchased by either a buyer or a seller.

Tax Insurance

• Transfers a known or uncertain tax liability from the  insured’s balance sheet to an insurer.
• The insurer will indemnify the insured for a  financial loss arising from a challenge from a tax  authority.
• Available both pre or post M&A transaction (or on a  standalone basis).

Key objectives of a M&A Insurance

Operation Completion

• Accelerate the negotiation process – fill gaps in the commitment to accountability
• Smooth, easy-to-apply M&A process
• Provide information and documents for leadership decision-making

Financial values

• Anti-discount, which is a guarantee and anti-fraud tool
• Low-cost solution

Full Divestment Seller & Buyer Recourse Directly from the Insurer

• "Clean" divestment seller & protection against post-merger liability risks
• The buyer seeks compensation directly from the insurer, Indemnification in case the seller cheats

Reputation

• The buyer can avoid having to sue the Seller
• PR Effects
• Transaction information and M&A litigation information are always confidential