Expanding our capabilities: Aviva launches Mergers and Acquisitions Underwriting
As part of our commitment to the Global Corporate & Specialty market, we have expanded our underwriting capability to include Mergers and Aquisitions.
What is Mergers & Aquisitions (M&A) underwriting?
For a buyer an M&A deal is fraught with risk and uncertainty despite heavy investment into due diligence provided by specialist suppliers.
To try to transfer some of this risk to the seller, warranties (contractual statements of fact about the target company given by the seller) are drawn up and where one or more of these statements was untrue at the point of transaction exchange (whether or not this was known by the seller at the time), there is a warranty breach and the buyer has contractual recourse against the seller.
Either buyers or sellers can put Warranty & Indemnity (W&I) insurance in place to protect themselves against financial loss as a result of a warranty breach. Whilst not a replacement for thorough due diligence, W&I is an effective tool of risk transfer and helps to smooth the way to a successful transaction, reducing the need for an escrow arrangement. For known issues, tax liability and contingent liability policies give peace of mind beyond completion of the deal itself.
Who’s it for?
W&I insurance is most suited to mid-market M&A transactions (i.e. deals with transaction values between £50 million and £1 billion). W&I insurance has become increasingly commonplace in these M&A deals and is now considered to be good corporate governance practice and a strategic risk mitigation tool by private equity buyers, strategic investors and major corporate acquirers alike. W&I insurance is particularly prevalent in the corporate real estate sector but is also used on a wide spread of operating business both in the UK and across the rest of the world.
Find out more
To learn more about M&A and the current trends in the market, our newly appointed Head of M&A Underwriting Josh Cowen recently contributed to a roundtable for publication Financier Worldwide which you may find interesting.
To discuss any opportunities or to find out more out our M&A covers, speak to your Aviva sales manager or email the team mailbox at MASubmissions@aviva.com
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