Warranty and Indemnity Insurance is an efficient and unique tool for protecting exposures arising from mergers and acquisitions in a relatively quick and simple manner, covering financial loss arising from misrepresentations.
In merger and acquisition transactions, the vendor needs to make statements and give undertakings to present a complete and accurate legal picture of the company, asset or activity they wish to sell. In the event that a misleading statement is made, or an obligation is not fulfilled, the purchaser can sue the vendor for the losses they suffer.
A W&I insurance policy covers losses arising from misleading statements and declarations made by the vendor in an investment, merger or acquisition transaction. The policy covers errors and omissions in connection with statements made by the vendor, including in connection with their tax liabilities, the accuracy of the financial statements and their compliance with generally accepted accounting principles, the status of the assets being transferred, a description of intangible assets such as intellectual property and the like.
Leaderim collaborates with leading international insurance companies in this specialist class of business and offers a diverse range of tailor-made solutions for mergers and acquisitions. In most cases, the policy needs to be tailored to the precise requirements of the client and to the terms and conditions of the agreement and the mutual covenants.
A W&I insurance policy can streamline the process of closing the deal since in many cases it provides a solution for disputes arising from the indemnity covenants made by the vendor and alleviates the need to negotiate the trust mechanisms. It can also alleviate the need to deposit a substantial share of the sale proceeds as part of the long-term trust provisions, only after which can the funds be released to the vendor.
W&I insurance is becoming increasingly prevalent and there are reports of deals which have only been closed by virtue of such an insurance policy, which has numerous advantages that should be considered in view of the various aspects of the transaction.
Major accounts: Leaderim has arranged W&I policy for major and complex transactions including in cases where there is no right of recourse against the vendor (other than in the event of fraud). Our clients include some of the largest investment funds in Israel and we have successfully settled some very complex claims including claims for tens of millions of Shekels.
Your specialists at Leaderim: