The Spectator, a weekly British magazine on politics, culture and current affairs, once mused that ‘t]he insurance industry is the boring uncle of the financial services family’ (https://www.spectator.co.uk/article/being-boring-has-shielded-the-insurance-industry-for-far-too-long). And one might, at first, be tempted to conclude that insurance in its classic sense – offering peace of mind, with any financial benefit accruing to the insured only in the event of a successful claim – has no obvious place in the M&A playbook.
However, transposing insurance and related instruments into an M&A context can not only support corporate restructurings, clinch transactions that would otherwise falter and unlock distressed deals: it can also create shareholder value. It’s for these reasons, which we expand on further below, that deal-makers and their advisers now routinely include insurance on their agenda, just as much as operational risk managers, albeit for quite different reasons.
Ironically, the successful application in M&A of warranty & indemnity (W&I), tax and related insurance solutions (together, M&A insurance) has also illuminated areas where risk transfer and similar…
