Mergers and Acquisitions (M&A) is a corporate strategy dealing with buying, selling and combining of different companies with the intent of improving financial performance without having to create and develop a new entity from the ground up. These deals are usually considered successful when the parties involved (or companies merging) emerge from the negotiations having fully taken into account the price paid, created value for their shareholders, and the realizable benefits of the potential risks.
Warranties and Indemnities Insurance (W&I Insurance) is designed for M&A-related transactions. It covers breaches in representations and warranties given as part of the sale of a business. Buyers can ensure the warranties have real value, even if the seller is unable to pay a warranty claim which arises sometime in the future. And, sellers can cover themselves to prevent sale proceeds being tied up in escrow accounts.