As businesses seek opportunities to deploy their capital, mergers and acquisitions often become integral components of this process. Understanding and managing the associated risks can be particularly challenging, especially when investing in unfamiliar markets or industries. Representations and Warranties Insurance is designed to support you in navigating these challenges.
Through such a policy, a buyer can protect themselves against losses arising from the seller’s breaches—whether intentional or unintentional—while a seller can safeguard against potential indemnity claims brought by the buyer.
Representations and Warranties Insurance provides financial protection against risks that may arise for parties involved in mergers and acquisitions (M&A) transactions.
It can be purchased by either the seller or the buyer, offering coverage for losses that may occur after the completion of the transaction.
- It provides coverage for potential future liabilities at a fixed cost (the insurance premium).
- It protects against losses arising from breaches of the representations and warranties stated in the share purchase agreement.
- It may also cover potential legal expenses.
Buy-Side Policy:
Protects the buyer against intentional or unintentional misrepresentations made by the seller.Sell-Side Policy:
Protects the seller against unintentional breach claims that may be brought by the buyer.Both types of policies provide assurance to the parties of the transaction in different ways.
Representations and Warranties Insurance applies to transactions involving a share purchase agreement.
This type of insurance is not applicable in public offering (IPO) transactions. However, the following insurance product can be used to cover liabilities that may arise during the IPO process:
Initial Public Offering (IPO) Insurance:
Provides coverage for the liabilities of the company, its executives, shareholders, and financial advisors arising from the prospectus.
