From the point of view of comprehensive risk management, in the case M&A activities, buying transaction insurance – Warranty & Indemnity Insurance is recommended. Sometimes in the sales/purchase process there are obstacles to seal the deal, which you can overcome by buying transaction insurance.

It is an insurance that facilitates and accelerates the conclusion of the transaction. Therefore, it enables an easier and cost-effective process of selling ownership shares. The primary focus of this insurance product is liability insurance for breach of warranties or warranties and representations provided by the seller to the buyer during the transaction process. Warranty or a guarantee is a contractual promise made by a seller of a business to a buyer. In addition, W&I insurance can be an alternative to the required deposit of money in a special escrow account. When presenting the W&I collateral, the buyer usually agrees to withdraw the request to deposit money into the escrow account. Insurance can be concluded both by the seller and by the buyer of a share in the company and protects individual interests or responsibilities.

On the seller’s side, the insurance protects the seller from certain losses in the event that the buyer files a claim against the seller in accordance with the transaction documentation for breach of warranty or insured compensation. In case of taking out insurance on the seller’s side, the buyer still makes a claim against the seller in accordance with the terms of the contract (SPA), and the seller then turns to the insurance company where he took out transactional (W&I) insurance for compensation in relation to such a claim.