Fusion’s aggregate policy limits typically range from USD / AUD 1m to 5m. 10% – 20% of the target’s enterprise value, although a policy limit of up to 100% of the enterprise value can be acquired.

Retention

Fusion applies a deductible of  1% of the enterprise value;

De minimis

Fusion applies a de minimis of 0.1% of the enterprise value, with a minimum of AUD / USD 10,000, to losses under W&I policies which will match, or can be lower than, the amount set out in the transaction documents, thus enhancing the buyer’s position.

We do however expect the de minimis to be the same or higher than the financial materiality thresholds applied to the due diligence reports.

Policy Periods

A W&I policy will provide protection for:

– 3 years following completion for general warranties, and;

– 7 years following completion for title and capacity warranties, tax warranties and claims under the tax indemnity.

Exclusions

Fusion applies market-standard exclusions to all W&I policies, including:

– any fact, matter or circumstances of which the buyer’s deal team members have ‘Actual Knowledge’;

– matters which are ‘Fairly Disclosed’ in the transaction documents, data room and due diligence reports;

– purchase price adjustments (other than those arising from warranty/indemnity claims) and leakage;

– the physical condition/design of properties;

– secondary tax liabilities, transfer pricing and the non-availability of carried forward tax-reliefs, fines,  penalties & damages, stand-alone tax liability

– Forward-looking Statements

– Consequential Loss

– Excluded and partially covered warranties

Premium

The premium is a one-off cost determined by the limits of insurance required, the nature of the transaction, the jurisdictions, the industry sectors and the governing law of the acquisition agreement.

Average premium rates from 1.5% for real estate transactions in lower risk jurisdictions to 3% of the policy limit for higher risk transactions. For certain deals with higher risk exposures, the rates can increase to between 3% and 5%.

Legal & Administration Fee

Fusion will require a Legal & Administration fee expense agreement to be entered into before commencing formal underwriting. This is to cover the cost of instructing external counsel and the platform administration. This fee is AU$ / US$ 1,500 before applicable taxes. the legal fee is charged in addition to the premium.

Fusion’s aggregate policy limits typically range from AUD 5m to 35m in the Pacific Region and USD 10m to 50m in Asia. 10% – 30% of the target’s enterprise value, although a policy limit of up to 100% of the enterprise value can be acquired.

Retention

The type of deductible applied to claims under W&I policies varies depending on the nature of the deal:

– For operational transactions, Fusion usually applies a deductible of 0.25% – 1% of the enterprise value;

– For real estate transactions, Fusion usually applies a deductible of 0.10% – 0.5% of the enterprise value.

– Fusion can also consider tipping to 1% or tipping to 0.5% options for certain transactions.

De minimis

Fusion applies a de minimis of 0.1% or 0.05% of the enterprise value to losses under W&I policies which will match, or can be lower than, the amount set out in the transaction documents, thus enhancing the buyer’s position.

We do however expect the de minimis to be the same or higher than the financial materiality thresholds applied to the due diligence reports.

Policy Periods

A W&I policy will typically provides protection for:

– 2 or 3 years following completion for general warranties, and;

– 7 years following completion for title and capacity warranties, tax warranties and claims under the tax indemnity.

Exclusions

Fusion applies market-standard exclusions to all W&I policies, including:

– any fact, matter or circumstances of which the buyer’s deal team members have ‘Actual Knowledge’;

– matters which are ‘Fairly Disclosed’ in the transaction documents, data room and due diligence reports;

– purchase price adjustments (other than those arising from warranty/indemnity claims) and leakage;

– the physical condition/design of properties;

– secondary tax liabilities, transfer pricing and the non-availability of carried forward tax-reliefs, fines,  penalties & damages, stand-alone tax liability

– Forward-looking Statements

– Consequential Loss

– Excluded and partially covered warranties

Premium

The premium is a one-off cost determined by the limits of insurance required, the nature of the transaction, the jurisdictions, the industry sectors and the governing law of the acquisition agreement.

Average premium rates from 0.8% for real estate transactions in lower risk jurisdictions to 3% of the policy limit for higher risk transactions. For certain deals with higher risk exposures, the rates can increase to between 3% and 5%.

Legal Fee

Fusion will require a Legal fee expense agreement to be entered into before commencing formal underwriting. This is to cover the cost of instructing external counsel. Legal fee typically range from AU$ / US$ 30,000 – AU$ / US$60,000. The legal fee is charged in addition to the premium.

This process usually takes between 1 and 2 days.

CONTACT US

1 Set Up Stage

The Seller or the Buyer and their Advisors set up the Project on our online SME M&A platform, with a view to purchasing W&I protection for their transaction.

2 Quote Pack Stage

The seller uploads its disclosure information and fills out the Digital Disclosure Form online.  The Buyer uploads its due diligence reports and SPA; and fills out the Digital Due Diligence Form online. Fusion delivers a Quote Pack offer to the Insured and its Advisor. 

3 Binder Pack Stage

The forms, SPA, disclosure information and due diligence reports are updated. Fusion provides a Binder Pack offer.

4 Signing and Completion Stage.

The Signed SPA is uploaded and the Signing NDA is executed online. The Fusion policy is issued. 

Transaction completion is confirmed and the Completion NCD is signed online.