Merger and acquisition (M&A) insurance products are designed to manage potentials risks and liabilities that arise in the course of an M&A deal. Used strategically, they can enhance a negotiation position and improve the final outcome of the deal.
Transactional liability insurance is designed to manage potential risks and liabilities that arise in the context of an M&A transaction. JLT’s services include insurance due diligence and M&A insurance solutions, such as warranty and indemnity insurance (W&I) and tax liability insurance.
We work with a wide range of clients including private equity firms, real estate and infrastructure funds, and corporations. Our team of specialists combine due diligence, transaction solutions, and insurance coverage placement to mitigate risk during a transaction.
Operating on a global platform, our M&A team brings depth and breadth of expertise across diversified industries and geographies.
WHAT WE DO
Our focus is within clearly defined industry and risk sectors, where we have become a leading global market performer, providing our clients with fit-for-purpose insurance and risk management services.
Our M&A team conducts risk and insurance due diligence, and assists in placing reps and warranty and other transactional risk policies. These policies provide protection against financial losses suffered as a result of an unexpected breach of warranty or claim under a tax indemnity in a sale and purchase agreement or tax deed.
Our key products and services include:
- Our M&A team consists of experienced insurance professionals and corporate and tax lawyers with former W&I underwriting experience
- JLT’s highly experienced global team delivers efficient and accelerated service to support the speed of the deal, 24/7
- Our coverage experts rigorously test our products and exclusive JLT wordings We consider both the coverage and claims perspective, and our claims team plays an active role prior to binding policy wordings to ensure that our clients get the broadest protection available
- We involve our dedicated claims management experts at the outset for their insights when designing insurance programs. We leverage their expertise to avoid any ambiguities in the wording and we work with markets that are claims responsive
- We work to simplify the complex, delivering insights and recommendations that are easy to understand and act on. We explain any complexities so that you know exactly what service you are getting and what you are covered for. We believe that our clients should know how to activate their policy should they need to and our ability to provide clarity is fundamental in doing so.
Stapling insurance to the deal
A mid-market UK fund was one of several bidders in a competitive auction process for a Netherlands target. Buy-side R&W insurance was a necessity on the deal on account of a very diverse shareholding base of over 200 individuals.
Our client was required to provide comfort as part of their final bid that a fully underwritten buyer’s R&W policy had been arranged to enable signing and completion to take place within two days of exclusivity being granted.
We worked with insurers based on the due diligence and red flag buy-side top-up reports to arrange a policy that mirrored the sale agreement warranties, and provided additional protection through a synthetic tax cover in the policy (despite one not being offered by the seller).
The seller achieved their goal of maintaining competitive tension until the very last moment, with our client successfully winning the auction and completing the deal on time.
Our client, a large international fund, was involved in a secondary buyout from management and the exiting venture capital fund. The exiting fund made it clear that the only available recourse in the event of a breach of warranty would be against the management sellers, who were taking very little from the deal.
The management sellers reluctantly agreed to provide a set of warranties, but on the condition that a blanket awareness qualifier would be applied and that their maximum aggregate liability would not exceed the sale agreement basket amount (0.5% of the deal size).
We worked with R&W insurers with a specific private equity focus to structure a policy giving protection up to 25% of the overall deal size, with a tipping retention of 0.5% of deal size. JLT negotiated a policy “awareness scrape,” which switched-off the general awareness qualifier for the majority of the warranties where it would be market to receive an absolute warranty. The result meant that the buyer would not need to pursue the management sellers should a breach of warranty arise, protecting the future working relationship.