M&A Insurance

M&A Insurance

Considering flotation or a private acquisition or sale? M&A Insurance is a useful way to ring-fence the warranties and liabilities contained in the merger or acquisition prospectus, offering documents, or Sale and Purchase agreement. 

We can offer IPO and Warranty & Indemnity Insurance for public offerings and private transactions.

Mergers & Acquisitions Insurance

Bring confidence for all parties: ring-fence SPA warranties and indemnities and transfer them to an insurer

  • Free-up capital that might otherwise be stuck in escrow
  • Remove uncertainty around long-term tax liabilities, by passing them to an insurer
  • Beef up your IP reps and warranties with bullet-proof insurance

Buyer policies can be structured to achieve any or a combination of the following:

  • Increase the amount of indemnity and extend survival periods
  • Back-stop an indemnity or other obligation where there’s concern the seller may fail to perform or is perhaps not financially able to meet its obligations
  • Broaden the scope of warranties & indemnities to a level acceptable to the buyer
  • Distinguish a bid in auction process

Seller policies can be used to:

  • Protect Passive sellers (silent investors)
  • Avoid funds being held in escrow – enabling early distribution of sale proceeds
  • Reduce contingent liabilities, e.g. tax liabilities Enable a “clean exit” 

Warranty & Indemnity Insurance

Disagreements over the scope of warranties and indemnities made by one party to another, or the duration or amount of a party’s indemnification obligations can break negotiations. A W&I policy can be an effective tool to bridge these gaps.

Primarily designed to respond in a merger and acquisition context, W&I can also be used to respond to warranties or indemnities given in other transactions such as:

  • Financings & Investments
  • Licensing Agreements
  • Liquidations
  • Restructurings & Workouts

 

Pricing

Pricing depends on the circumstances, but a rough guide is 1% to 3% of the policy limit (subject to industry sector, geography, domicile of the insured entity, governing law of the SPA and transaction value). Although the insurance market has historically been geared towards minimum deal values of £20m to £30m, insurance is now commonly available for transactions in the range of £3m to £5m.

For transactions below this value W&I insurance is often uneconomic.

For an initial non-binding quote indication, we need:

  • Copy of draft sale and purchase agreement
  • Most recently filed audited accounts
  • Disclosure letter if available
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You can call us to talk more about your business on +44 (0)1223 200650 or +44 (0)20 3865 0149

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About La Playa Science & Technology

Specialist & Independent

Specialist & Independent

La Playa's specialist Science & Tech team can help you protect your business with smart, flexible, high-performance insurance - with a friendly human UI. We understand the risks and pressures you face - and we speak your language.  We’ll support you with great advice - helping you make good decisions for your business. 

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We also offer Business Protection (including Key Person Insurance) and Employee Benefits: a joined up approach with a team of advisers working for your best financial interests - all under one roof

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Tech-based business is 24/7, global and borderless, exposing you to new risks and liabilities - often in unfamiliar places. As the law struggles to keep pace with technology, insurance can provide a real safety net if you fall foul of changing legislation.

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Hanna Beaumont FIRM

DIRECTOR, CORPORATE

Direct Dial: +44 (0) 1223 200664

Mobile: +44 (0) 7795 473071

Email: hanna.beaumont@laplayainsurance.com

Twitter: @HannaBLaPlaya