Minimizing M&A Risks

Insurance for corporate transactions, known as representation and warranty coverage (R&W), is becoming increasingly common among both buyers and sellers engaged in global mergers and acquisitions. Marsh says demand for R&W insurance has jumped 35% over the past 12 months, even as M&A fell.

“Demand for transactional risk insurance has soared as both buyers and sellers worry about how to protect their positions during a deal,” says Lorraine Lloyd-Thomas, senior vice president in the private equity and M&A practice at Marsh. “We are increasingly seeing sellers build transactional risk insurance into the M&A process in order to exit with minimal post-closing warranty exposure, while at the same time preventing buyers from seeking to reduce the purchase price.”