Enables a clean exit
Easing of deadlocks and facilitation of the sale
Immediate distribution of sales proceeds with a reduced need for escrows
A more attractive target
Potential for a higher valuation
Specialist liability coverage
Improved certainty of payment due to insurer’s superior credit rating
Protects investment and supports lending for the transaction
Enhances the bid position and enables the transaction negotiations
Increases Board transaction comfort
Protects against future disputes involving target management
First party coverage The result is a W&I/R&W policy with the following coverage features:
Losses resulting from a breach of a seller warranty or a seller’s obligations in a tax deed of covenant
Costs associated with defending claims
Extended duration of cover compared to the survival period in the Sale Agreement
Flexibility with thresholds compared to the Sale Agreement
Fraud on the part of the seller (buyer-side policy only) Information and features.
Aggregate policy limits are typically AUD 1m to 2.5m, and ~10% to 30% of the target’s enterprise value, although a policy limit of up to 100% of the enterprise value can be acquired.
AUD 1m to AUD 50m
Our insurers typically apply a deductible of 2% of the enterprise value, dropping upon expiration of escrow or other pre-defined period.
A policy will provide protection for:
Market-standard exclusions, including:
The premium is a one-off cost determined by the limits of insurance required, the nature of the transaction, the jurisdictions, the industry sector and the governing law of the acquisition agreement.
Average premium rates from 3% to 5% of the policy limit.
Insurer charges a Legal fee expense agreement to be entered into before commencing formal underwriting. This is to cover the cost of instructing external counsel. Summary reviews are conducted.
Legal fee typically ranges from AU$ 5,000 to AU$25,000 before applicable taxes. The legal fee is charged in addition to the premiums.
