Mergers and Acquisitions (M&A) continue to be a key strategy for corporations to drive growth and increase profitability of businesses domestically, cross-border and across various industry sectors.
Warranty & Indemnity (W&I) insurance enables deals through the transfer of potential specific risks relating to that M&A transaction, helping to both reduce uncertainty and to close deals more quickly.
This insurance can be either seller-side or buyer-side policy, with the following potential benefits:
W&I insurance is a solution designed to transfer risks associated with mergers and acquisitions (M&A) to Insurers.
This tailored product, whether held by the Buyer or Seller, provides financial cover to the Insured in the event of a breach of warranty, a claim under the tax covenant or a misrepresentation in the underlying acquisition agreement.
The buyer-side policy allows the Buyer to claim from the Insurer what they are contractually entitled to from the Seller under the acquisition agreement.
The policy can be used as a powerful deal tool to streamline negotiations between the parties.
It can allow the Seller to limit its liability, whilst also giving the buyer the protection it requires through a W&I insurance policy.
The result is a policy tailored to the specific transaction and with the following coverage features:
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.
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.
This process usually takes between 1 and 2 days.
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.
If you’d like to have a conversation with one of our team, please send us your name, email and phone number and we’ll get back you to as soon as possible.