Key Issues to Consider When Allocating M&A Transaction Risk

Due to falling costs, faster underwriting, and improving policy terms, M&A transaction insurance has risen in popularity as a tool to allocate deal risk in private-target M&A deals to an insurer. Consequently, we are publishing this guidebook to aid deal practitioners in utilizing various forms of M&A transaction insurance. Such forms include Representations and Warranties Insurance (“RWI”) as well as specialized policies that cover risks excluded from RWI, such as those associated with taxes, litigation and other contingent liabilities.

This guidebook provides the following information:

  • An overview of the various M&A transaction insurance types,
  • Issues related to the various types of M&A transaction insurance,
  • A comparison of the relative strengths of escrows and insurance in managing deal risks, and
  • A discussion of how escrows and insurance can be used together.

This guidebook is not meant to be exhaustive; rather, we hope that it serves as a concise and convenient reference guide.

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