Has Your Buyer Forced Guarantees Out Of You? You Can Insure Against This Risk
The Purchase & Sale Agreement for the sale of a business often includes clauses that impose on the vendor liabilities for future contingencies. These are well explained at this link.
Today’s article by the legal firm, MintzLevin, covers how vendors can insure against these risks.
The prospect of unknown business risks between buyers and sellers is often a major hurdle in mergers and acquisitions deal negotiations. Neither side wants to assume responsibility for issues such as financial statement errors, taxes, contracts, intellectual property, or undetected compliance violations. To address this problem, during the last ten years the insurance industry has taken on some of the risk in M&A deals, so that the buyer and the seller are not the only parties who face this uncertainty.
Many underwriters now provide representations and warranties (R/W) insurance policies to allow third-party insurers to assume a portion of transaction risk … Read the article here.