Transactional Risk Insurance for Mergers and Acquisitions

Organizations involved in the purchase or sale of assets or shares face significant financial exposure arising from potential breaches of representations and warranties. These risks may affect either the buyer or the seller and can create material liabilities that impact the success of the transaction.

Transactional Risk Insurance—commonly known as Representations and Warranties Insurance—provides a strategic solution for transferring such risks. This coverage can be arranged by either party and is designed to enhance deal certainty while protecting against unforeseen post-closing liabilities.

For purchasers, key benefits include:

• Financial protection in the event of a breach of a representation or warranty by the seller

• The ability to negotiate reduced indemnification obligations or escrow requirements

• Extension of the survival period for representations and warranties beyond standard contractual limits

For sellers, advantages may include:

• Protection against financial loss resulting from alleged or actual breaches

• Reduced post-closing indemnity obligations, including escrow or holdback arrangements

• Coverage for unintentional or unknown breaches, enabling a cleaner and more definitive exit

Transactional Risk Insurance can serve as a critical enabler in facilitating smoother negotiations, accelerating closings, and limiting post-transaction exposure. Our experienced advisors work closely with clients to structure tailored solutions aligned with the unique objectives and risk profile of each transaction.