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Financial Risks

Mergers & Acquisitions

Mergers & Acquisitions cover should be seriously considered during the purchasing of or selling of a business. There are a great deal of issues to factor in and risks to assess, as those of you who have undertaken such a huge step will be fully aware of. Mergers and Acquisitions insurance will provide protection that can exceed closing escrows and enable payment of post-closing claims, whilst avoiding litigation between buyer and seller should all not go well down the line, once a deal has been completed. Having this cover in place, as any Corporate lawyer will tell you, can be the difference which makes a deal complete, or indeed fail without it being in place to give everyone involved, effectively a legally binding ‘peace of mind’.

Warranty and Indemnity Insurance

Warranty and Indemnity Insurance can be linked to M&A cover and is structured to protect against any breaches of warranties or claims under a tax covenant within a sale and purchase agreement. For the seller, the policy will cover any resulting claims from a breach of this agreement. The seller is also enabled to limit their liability as well as gain immediate access to the sale proceeds, without the need for a balance sheet reserve or having to tie up funds in escrow. As a buyer, this cover provides the comforting knowledge that the damages following insured breaches of representations in the SPA, as well as defence costs in relation to any third party claims arising, will be covered.

Public offering of Securities/Flotation

Public offering of Securities/Flotation risks cover can be purchased by Companies/corporations wishing to make a public offering of stock on the numerous UK and European stock markets, including GXG, AIM and LSE. Cover protects both the Company as an entity, as well as the individuals involved within the company, against legal defence costs incurred in the event of a claim being brought by persons/bodies such as new shareholders, other entities or government departments in relation to the Flotation itself. Common claims include allegations of misrepresentation by the existing shareholders/Directors in the prospectus and flotation documents, and also allegations from new shareholders of mis-management by the board following a flotation. Financial exposure can be huge and cover is key to protecting businesses before they start the flotation process.

Management and Entity Liability

Management and Entity Liability covers a business from such diverse risks as Government body investigations, including HMRC, H&S Executive, Companies House, down to Employment practice liabilities arising from allegations by employees for Race/Sex/Religious/Disability discrimination. Many Directors and even general employees are finding themselves in a situation of being accused of wrong-doing and are finding their liabilities are not at all as limited as they believed them to be. This is an essential risk protection tool to ensure an individuals’ personal assets are not at risk as well as their livelihood, whilst they go about their daily business life.