Insurers are increasingly willing to offer R&W coverage for health care mergers, but they’re paying close attention to areas at high risk for exposure.
Highly regulated and prone to litigation, health care companies are considered risky purchases. So much so that, for a long time, the insurance market refused to provide coverage for deals in the industry.
But health care is also one of the most active parts of the economy for mergers and acquisitions. The frenzy of activity since the end of the Great Recession has been such that underwriters are now offering representations and warranties insurance for most M&A deals in the sector.
R&W protects buyers from future liabilities that can emerge from a company they have purchased. With the overall M&A market on a roll, players such as private equity companies and others have increasingly opted to use the coverage to facilitate deals. The health care industry, where transactions have ballooned in recent years, has lately caught up with the trend.
Consultancy Kaufman Hall estimated that there were 115 health care M&A deals in 2017, amounting to $63.2 billion in transacted revenues. In 2016, the numbers were 102 and $31.3 billion, respectively, and the party continues to go…
