M&A deals: mitigating risks of cross-border investments
For Chinese investors, acquisitions of foreign companies offer great opportunities. At the same time, closing deals and turning M&A investments into long-term successes has proven to entail significant challenges for Chinese investors.
M&A related insurances can help to mitigate the risks associated with such cross-border M&A investments. The cornerstone of a successful M&A activity is a Warranty & Indemnity (W&I) insurance. For Chinese investors, W&I insurance is particularly interesting as a strategic instrument that creates added value beyond the immediate financial protection of the insurance coverage.
Avoiding deal breakers by transferring liability risks
M&A transactions pose a challenge to everyone involved. Negotiations concerning warranties and indemnities often test one’s patience and can become deal breakers in transactions. W&I insurance covers breaches of representations, warranties or certain indemnities (including the tax covenant) given by the seller to the buyer in the Sale and Purchase Agreement. The timing of M&A makes it difficult to fully assess and address the risk exposures of an acquisition. Remaining risks can be covered by W&I. The insurance covers loss or liability arising from unknown or undisclosed matters and provides indemnity for financial loss of the buyer or seller that arise from these matters. Our experts tailor each W&I insurance policy to meet the specific needs of the respective M&A transaction.
Full service advice throughout the lifecycle of a deal
As a specialist in the field, Funk understands the legal and geographical complexities of cross-border M&A transactions. We work as an extension of your M&A team and act as a partner in insurance matters for strategic investors, private equity firms, pension schemes, lawyers and tax advisers as well as M&A advisers.
Funk is your expert partner in all transaction phases – from professional insurance due diligence to post-transaction integration of the target. Whether Warranty & Indemnity, Contingent Risk or Title insurance, our experts will place coverage tailored to your investment project in a matter of days, ensuring that risks of cross-border investments are mitigated.
Risks
Political risks
Globalisation connects companies today with partners and clients all over the world. This brings along new challenges, because political developments can have a direct impact on business success.
Liability risks
The potential liability of companies varies depending on the industry or clientele. Nevertheless, all companies have one thing in common: even small mistakes can lead to severe losses.
Property damage and BI risks
While property insurance is a basic protection every company should have, the risk of business interruption is increasing steadily as well – especially for globally connected players.
Services
Funk China
Investing and operating outside of China becomes more and more essential for Chinese companies. The Funk China Division supports its Chinese clients in managing the risks, challenges and chances of worldwide outbound investments.
Insurance + risk management
Funk devises and implements holistic risk and insurance solutions for companies across all industries, sectors and countries. In doing so, our experts do not only secure your individual assets but also create genuine added value for your company.
Employee health + benefits
Employee benefits concepts are a sustainable component of a good corporate policy. Funk provides comprehensive, transparent advice with a view towards the long-term advantages for your company and your employees.
