Overview of Recent Trends in Warranty Insurance in M&A Transactions | White & Case LLP International Law Firm, Global Law Practice
Overview of Recent Trends in Warranty Insurance in M&A Transactions

Overview of Recent Trends in Warranty Insurance in M&A Transactions

In the current economic climate, the appetite of purchasing parties to take on risk in an M&A transaction has greatly decreased. At the same time, sellers remain under intense pressure to contain outstanding liabilities, and achieve a "clean exit" through an M&A transaction. This Insight looks at the use of Warranty Insurance as an innovative way to "bridge the gap" between buyer and seller in negotiations and as a means to help close transactions where the risk gap between them would have otherwise blocked the signing of a deal. Warranty Insurance not only helps sellers achieve a clean exit, but also can be used by buyer parties to "sweeten their offer" in a competitive auction process, by providing a bidder with the means to accept lower liability thresholds from the seller than it would without Warranty Insurance.

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