W&I is increasingly utilised in transactions as the insurance market has grown significantly in recent years. The buyer is typically the insured party. In the event of a breach of warranty, normally due to a misrepresentation by the vendor, the buyer is able to claim directly against their W&I policy for the reduction in value of the purchased business.
Whether a fund, individual, corporate entity, trustee, lender or advisor; our specialist team can arrange bespoke coverage to reflect the specific requirements of the transaction.
The benefits of W&I in a transaction can include:
- a clean exit and allows the distribution or reinvestment of sale proceeds, or wind up fund
- elimination of the need for escrow
- help if vendor is unable or unwilling to give financial support behind warranties
- management retained with the new company are protected
- comfort for seller should the buyer have a reputation for litigation
- gives comfort to debt providers if concern exist over financial position of seller
- can use as competitive advantage in auction process (as they don’t require a high liability cap as taking out insurance)
- buyer can go direct to policy, rather than sue the seller
- insurers effectively guarantee the buyers diligence
Working closely alongside our client and their advisors, our experienced W&I team can arrange cover that meets the needs of both parties.
No two deals are alike, which is why the pricing, coverage and deliverability are the key elements of our process. Achieving the optimum cover for each transaction and ensuring the policy is fully fit for purpose can drive significant value to all parties involved. Transaction timescales are often tight; understanding the strengths and weaknesses of the growing number of insurers is increasingly important.