It’s no secret that whether you are the buyer or seller, protecting yourself from the chaos of unforeseen liabilities should be of utmost priority. Fortunately, a number of carriers offer transactional liability insurance products.
Transactional insurance is a collection of products including representations and warranties, tax liability, pollution and contingent liability.
These products can be used to distinguish a bid and bridge the gaps that arise between buyers and sellers. Sellers seek to minimize indemnities and survival periods, while the buyers want to maximize the escrows and extend the representation period.
Keep in mind, unplanned liabilities can affect both sides of the transaction. In general, underwriters will require both buyers and sellers to have “skin in the game” relative to the policy structure. While there is a minimum policy premium plus due diligence fees, in the end both will benefit from streamlined negotiations and more confident transactions.
Look for a solid broker with a dedicated M&A practice and the right carrier markets.
Seasoned professionals can help both buyers and sellers navigate to the most appropriate transactional product, which helps you to increase your close success rate by removing a deal’s intrinsic uncertainties.
Jeffrey Schwab is senior vice president and practice leader of the Mergers & Acquisitions/Private Equity Practice at Oswald Cos. Contact him at 216-658-5208.