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Transactional Risk

Transactional risk insurance helps protect you from merger and acquisition (M&A) deal risks, whether you are a buyer or a seller. Marsh can help you asses your deal risks, optimize your coverage and risk management strategies, and minimize impacts to your bottom line.
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In the world of M&A, strategic buyers, private equity firms, and other deal principles face numerous challenges and risks in M&A transactions. To address these concerns, transactional risk insurance solutions such as representations & warranties (R&W) insurance, tax insurance, and contingent liability insurance– have become essential tools used by dealmakers to mitigate M&A-related risks and enhance returns.

Our transactional risk insurance specialists possess extensive industry experience, with backgrounds in M&A, corporate law, taxation, investment banking, and accounting. With their deep understanding of the ever-changing dynamics that parties facethroughout the entire transaction process, our experts are able to craft customized solutions that align perfectly with the fast-paced nature of deal timings.

As the global M&A landscape becomes  increasingly complex, the demand for transactional risk insurance is on the rise.  Through our strong relationships with leading transactional risk insurers worldwide, our specialists collaborate with international team members to provide comprehensive coverage that addresses local risk issues. Additionally, ur dedicated claims teams and resources are available to guide you through  any transactional risk claim process.

We offer solutions that help you to understand, quantify, and mitigate M&A-related risks, empowering you to increase deal value, maximize returns, and bridge gaps in deal structure. With marsh’s transactional risk insurance expertise, you can navigate the intricate world of M&A.

Note: Representations and warranties (R&W) insurance is the term used in the US and Canada; elsewhere the term warranty and indemnity (W&I) insurance is used.

Specifically, M&A deal participants should seek to work with risk advisors that can offer:

Dedicated transactional risk expertise

Advisors with experience working on M&A deals can help identify potential challenges during the deal process for which insurance and other strategies can offer solutions. They can also help build insurance programs with terms and conditions aligned to specific risks.

Market knowledge, relationships, and insights

Not every insurer is the same, and it is important to select the right one, given the unique nature of each transaction. The right advisor can offer guidance on the risk appetites, preferences, and capabilities of various insurers and help insureds navigate the underwriting process.

Robust data and analysis

Along with a broker’s experience in working on previous transactions, peer benchmarking and other analytical tools can inform critical decisions about how to structure insurance programs, including selecting appropriate coverage limits.

Claims experience

Advisors with a history of working on complex transactional risk claims are uniquely positioned to provide guidance in the event dealings with an insurer take a contentious turn following a loss.

Our people

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Craig Schioppo

Global Head of Transactional Risk

  • United States

Martha Barajas

Martha Barajas

Regional Transactional Risk Leader, Specialty

  • Mexico

Leo Flindall

Leo Flindall

Co-Head Transactional Risk

  • United Kingdom

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Haoren Fu

Head of Transactional Risk, Asia

  • Singapore

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Eliza Grant

Head of Transactional Risk, Pacific

  • Australia

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Mandira Gupta

PEMA India Practice Leader

  • India

Alastair Lowry

Alastair Lowry

Co-Head Transactional Risk

  • United Kingdom

Hans Swolin

Hans Swolin

Head of Transactional Risk, Europe

  • Sweden

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Craig Warnke

Chief Operating Officer, Transactional Risk, North America

  • United States

FAQs

As a business, risk preparation is always key. However, even with optimal planning, there’s always room for disruption in a steady workflow. Taking steps to minimize disruptive risk is critical to the success of a transaction, particularly when it comes to completing sensitive mergers and acquisitions.

Strategic buyers, private equity firms, and deal participants, especially across borders, need to keep transactional risk top of mind while closing deals. Common instances of transactional risks that can impact M&A activities include:

  • Foreign exchange deals: Cross-border transactions create economic exposure and high volatility.
  • Commodity: Fluctuation in prices impact all parties involved.
  • Interest rates: Fluctuation of interest rates can also impact transactional value.
  • Counterparty obligations: Relying on a partner in a business transaction always comes with a level of risk if contractual agreements cannot be met.
  • Timeliness: Market condition changes can impact the time it takes for a transaction to finalize.

Tax treatments taken by buyers and sellers within M&A activities can also make it difficult to manage transactional risk, as can fraudulent conveyance.

Strong due diligence, coupled with insurance designed specifically for transactional risk, can help facilitate your deal.

Transactional risk insurance provides coverage for strategic buyers, private equity firms, and deal participants involved in mergers and acquisitions. It typically includes representation and warranties insurance or warranty and indemnity insurance, tax liability insurance, contingent legal risk insurance, and environmental liability insurance.

Insurance coverage for transactional risk allows parties in a merger or acquisition to transfer many of their risks to an insurance provider and away from their balance sheet. This allows companies to allocate them away from the transaction itself and eliminates the need for special indemnities or purchase price reductions.

Tax insurance is an example of a customized solution which can cover unknown tax issues, with each policy having a discrete “insured tax treatment,” or known exposure, that a company wishes to insure.

We help companies determine what kind of risks are involved in making transactions across a large scale, whether it involves foreign currency exposure, interest rates, or other determining factors that could impact the end deal.

Monitoring such risks on a regular basis makes it easier to measure their potential impact when a transaction is in the works. This should go hand-in-hand with proper due diligence and an appropriate insurance program.