Merger and Acquisition - Protecting Buyers & Sellers

Merger and Acquisition - Protecting Buyers & Sellers

Buyers and sellers of business, can transfer the risk of breach of sale warranties. This can protect balance sheets and reduce the risk of potentially costly litigation.  

How: Through an efficient on-online platform buyers and their advisors provide responses to affect the due diligence process questions and purchase this insurance.  For a seller policy, the seller and/or their advisors provide online responses to disclosure process questions. It a seamless process, economical costed and rapidly delivered.

This solution locks in coverage for the buyer and seller for the agreed Covered Risks.

  • Can sit independently of any warranties in the sale agreement
     
  • Will not require a sale agreement breach to trigger loss payable under the policy.
     
  • Has no requirement for external due diligence reports to be supplied which reduces the time and cost of insurance.

You might use this solution when:

  • The Seller is not willing or not able to give any warranties, or when the level of warranty cover which is required by a buyer is insufficient.
     
  • Seller is providing warranties, but the buyer would like additional reassurance and recourse to a highly reputable insurance company which is backed by internationally recognised and highly rated corporate insurers and Lloyd's markets.
     
  • Parties do not have time to engage in the normal W&I insurance process (requiring the preparation of external due diligence reports and underwriting calls to negotiate policy wording)
     
  • Parties do not have the time, resources or appetite to negotiate warranties in the sale agreement and would like to use the policy as the sole avenue for warranty breach recourse.

Examples of what are Covered Risks:

  • Title and Capacity
  • Superannuation
  • Insolvency
  • Litigation
  • Shares    
  • Records
  • Assets, Plant and Equipment    
  • Taxes and Duties
  • Financial position including accuracy of Audited or Management Accounts        
  • Employees
  • Insurance
  • Intellectual Property        
  • Compliance with Laws
  • Computer Systems and Software        
  • Material Contracts
  • Real Property (Freehold and Leasehold)        
  • Accuracy of Information

Options available:

  1. "Back-to-back" coverage is by taking the Covered Risks including them in the sale agreement in place of the warranties (with a nil recourse provision).
     
  2. The sale agreement can be signed with separate warranties and the policy obtained as an enhancement or to give greater risk protection.
     
  3. The sale agreement can be signed with no warranties, placing reliance on the insured Covered Risks to provide protection in the event of loss.
     
  4. A signed sale agreement can be amended to replace the warranties with the insured Covered Risks.

Why take this type of cover?

If you want to shorten the time it takes to buy or sell a business, and maximise the protection for the buyer and seller, then this insurance offers speed, efficiency and a highly cost effective solution to  cover important warranties and undertakings.  

We can also connect you with our expert key partner lawyers and accountants, should you not have experts in this field of commerce, who can represent your interests in the sale.
If you want to buy or sell a business or asset, see how you can de-risk your  position more easily and  simultaneously remove impediments to a successful sale.

Call us for more information or go to downloads for our brochure.