W&I insurance can be purchased by either a buyer or a seller however the buy-side policy is largely used to afford the seller a clean exit and provide the buyer a direct means of recourse as an alternative to pursuing the existing warrantors in the event of a claim. Buy-side policies are often initiated by a seller (or management team, private equity firm, infrastructure fund, bank, real estate firm or corporate) as part of an auction process and the policy is then ‘stapled’ to the transaction.
The BMS Private Equity, Mergers & Acquisitions and Tax team will work with you to ensure that the W&I process works as efficiently as possible in tandem with the M&A transaction timeline. The policy is designed to support rather than replace the underlying transaction and insurers will require a robust due diligence and disclosure process to be carried out.
The premium is calculated as a rate-on-line of the policy limit being purchased. There are various factors which will affect this rate such as the nature and jurisdiction of the target business being bought, the governing law of the transaction, the scope of the warranties and whether any specific enhancements to the policy are required. These variables will be discussed at the outset of the transaction and the one-off premium will be payable once completion of the transaction has occurred.
W&I insurance policies will usually exclude matters that are known to the insured including matters disclosed by the seller or within the buyer’s actual knowledge. Forward looking statements, certain fines and penalties, pension underfunding and post completion purchase price adjustments are often excluded. There may also be deal specific exclusions depending on the underlying transaction i.e. target industry, jurisdiction or a specific risk that has been identified in the due diligence process.
April 15th, 2021
View Flipbook
M: +852 9255-7088
More Info / Email Me
M: +852 9772-9951
More Info / Email Me
T: +65 6230-7987
M: +65 8321-6236
More Info / Email Me
T: +44 (0)20-7480-0264
M: +44 (0)7341-133-007
More Info / Email Me
T: +44 (0)20-7480-0308
M: +44 (0)7876-815-643
More Info / Email Me
T: +44 (0)20-7480-0378
M: +44 (0)7824-605-613
More Info / Email Me
T: +44 (0)20-7480-0346
M: +44 (0)7770-990-368
More Info / Email Me
T: +44 (0)20-7480-7288
M: +44 (0)7825-844-988
More Info / Email Me
T: +44 (0)20-7374-5937
M: +44 (0)7826-532-908
More Info / Email Me
T: +44 (0)20-7374-5109
M: +44 (0)7880-443-186
More Info / Email Me
One America Square
London EC3N 2LS
United Kingdom
T: +44 (0)20-7480-7288
M: +1 416-845-4572
More Info / Email Me
T: +1 416-722-8171
More Info / Email Me
T: +61 (2) 9165-3502
M: +61 (0) 432-805-729
More Info / Email Me
Level 3,
222 Clarence Street,
Sydney NSW 2000
T: +61 (2) 9165-3500
T: +34 91-419-76-30
More Info / Email Me
c/ Serrano, 240. Planta 5
28016 Madrid
T: +34 91-419-76-40
T: +1 786-581-1899
More Info / Email Me
800 Brickell Avenue
Suite 350, Miami, Florida 33131
T: +1 786-581-1896