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.