Delivering value in the M&A process
At PLATFORM, we provide private equity and corporate clients with risk transfer solutions tailored to the unique needs of any M&A transaction. Led by seasoned M&A advisors, we develop, structure and broker customized transactional risk solutions including R&W insurance, tax liability insurance and other bespoke solutions.
Transactional Risk Solutions
Representations and Warranties (“R&W”) insurance is an insurance policy used in mergers and acquisitions to protect against losses arising due to the seller’s breach of certain representations in the acquisition agreement.
R&W insurance policies are customized to each particular transaction and can replace or supplement escrow or holdback arrangements in purchase and sale arrangements.
For both parties, the anticipated use of representations and warranties insurance usually simplifies and speeds up the negotiation of the acquisition agreement since the seller has less interest in negotiation the scope of its representations, especially if they do not survive closing.
Further, a buyer’s bid can look more attractive to a seller if there is no (or limited) escrow or holdback required, since the buyer will rely on the insurance for indemnification protection.
Tax insurance can be used to:
- Reduce or eliminate financial loss arising from a tax authorities’ successful challenge of the tax treatment of a transaction,
- Protect against a tax position taken by a party to the transaction, or
- Protect against a tax position where the tax authorities refuse to provide an advance ruling on an identified tax issue (in a non-transactional event).
Tax insurance can cover a wide range of known tax risks including but not limited to withholding taxes, transfer pricing, R&D tax credits, rollover relief, net operating losses, debt/equity treatment, revenue/capital distinction etc.
The tax insurance policy will cover the identified tax exposure as well the related penalties, interest, defense costs and other supplementary items.