The Role of Insurance in Mergers and Acquisitions

Throughout your business’s journey, you may encounter situations where it’s logical, profitable or even necessary to join forces with another company. In these situations, one party may acquire the other, or a merger may take place. In either situation, significant financial risk abounds. At Chichester Insurance Agency in Blythewood, South Carolina, our dedicated team stands ready to help our commercial clients understand these processes and how the right coverage can make all the difference.

What Insurance Covers Mergers and Acquisitions?

As your company plans to acquire another business or engage in a merger, you cannot afford to cut corners or make assumptions. Your business’s future and very existence may be at stake during these processes, necessitating appropriate diligence and risk management. Fortunately, an appropriate mergers and acquisitions (M&A) insurance policy can help.

What Does M&A Insurance Cover?

M&A insurance, also known as transactional risk insurance, may consist of several crucial financial protections for mergers and acquisitions, including the following:

• Representations and warranties coverage—This part of an M&A policy can help financially protect businesses involved in these transactions from representation and warranty breaches committed by sellers.

• Tax liability coverage—This coverage may compensate policyholders for losses should a tax authority successfully challenge tax exposures during a merger or acquisition.

• Contingent liability coverage—M&A insurance may also offer financial security if a company involved in a merger currently faces ongoing litigation or outstanding liabilities that might incur future losses.

We’re Here to Help

At Chichester Insurance Agency in Blythewood, South Carolina, we understand that mergers and acquisitions are complicated and stressful. While potentially reaping lucrative rewards and opportunities, these transactions also carry significant risk. Contact us today to learn more about appropriate coverage and confidently move forward with your company’s future.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.