Mergers and Acquisitions (M&A) activity can often present a unique array of legal, tax, and operational risks requiring expert advice to deliver bespoke solutions.

W Denis, a specialist global insurance broker, provides tailored  solutions that allow buyers, sellers, and their advisors to manage these risks effectively and efficiently, enabling deals to proceed with confidence.

This service complements the due diligence undertaken by lawyers and accountants and includes; Warranty & Indemnity (W&I) Insurance , Tax Liability Insurance and Additional Risk Transfer Products.

Warranty & Indemnity (W&I) Insurance

This product transfers the financial risk of unknown breaches of representations, warranties, and indemnities in a sale and purchase agreement (SPA). Cover can be structured for either the seller or buyer, depending on the deal structure.

Typical features include:

• Loss arising from breach of warranties
• Tax indemnity protection
• Defence costs
• Seller fraud (for buyer-side cover)
• Coverage aligned with SPA liability periods—typically 2 years for general warranties, up to 7 years for tax matters.

Why Should You Choose W&I Insurance?

W Denis can assist clients in:

• Securing a clean exit for private equity, funds, administrators or trustees
• Enhancing bid competitiveness in auctions
• Satisfying requirements of lenders or investment committees
• Replacing escrow or holdbacks with insurance-backed protection
• Mitigating enforcement challenges across complex jurisdictions
• Covering multi-seller deals where joint and several liability would be impractical

Tax Liability Insurance

This is used to ring-fence known or potential tax exposures uncovered in diligence, or arising from structural complexities or legal ambiguities.

This product can provide cover for:

• Specific identified risks or exposures
• Interest and penalties levied by tax authorities
• Defence costs
• Extended coverage periods (up to 7 years)

Additional Risk Transfer Products

• Contingent Risk Insurance (e.g. litigation buy-out)
• Environmental liability within transaction scope
• Real estate-specific W&I structures (e.g. JPUTs)
• Title and covenant gap covers
• Completion account disputes

Illustrative cases:

Real Estate Investment Exit

A UK real estate investment fund completed the disposal of a commercial property held through a Jersey Property Unit Trust (JPUT). The private investor vendor proposed warranty protection capped at just £1.3 million on a deal valued at £40 million. This was significantly below the buyer’s expectations. A W&I insurance policy was arranged to provide the buyer with an additional £7 million of coverage, creating a combined protection of £8.3 million. This enabled the investor to distribute sale proceeds immediately without placing funds into escrow. The buyer gained the comfort necessary to complete a share acquisition, which avoided Stamp Duty Land Tax otherwise applicable to a direct property purchase. The W&I policy offered comprehensive protection for general and tax warranties and the tax deed, helping facilitate a tax-efficient structure and a clean exit for the seller.

PE Exit with Management Spinout

An electronics distribution company was sold to a trade buyer. Prior to the sale, a section 110 Insolvency Act 1986 reorganisation was implemented to allow loss-making, non-core subsidiaries to be spun out to the management team. The private equity investor and other selling shareholders were not prepared to offer warranties on the integrity of the restructuring. W&I insurance was secured to cover the SPA warranties and also included a bespoke indemnity for the risk that the demerger had not been properly executed. This enabled the private equity sellers to exit cleanly and reassured the buyer that no residual liability from the group restructuring would materialise post-completion.

Education Sector Family Trust Sale

The trustees of a family-owned private schools business in the UK agreed to sell the company to a trade buyer for £13 million. The buyer required warranty protection of £6.25 million. However, the only warrantor was the CEO, who stood to receive less than this amount and was unwilling to put personal assets at risk. The trustees themselves were not prepared to provide warranties as they were not receiving proceeds. A seller-side W&I policy was arranged to match the CEO’s liability cap, ensuring the buyer’s requirements were satisfied while allowing the trustees to finalise the sale in accordance with their fiduciary responsibilities.

Restaurant Group Acquisition

A London-based restaurant group sought to acquire three restaurants backed by individual investors. The founder, who was asked to give warranties, was unwilling to offer more than £100,000 in liability given his limited return on the deal. The buyer’s bank was uncomfortable with this limited recourse. To resolve the impasse, a W&I insurance policy provided the buyer with an additional £2 million of cover, allowing the transaction to proceed. The buyer obtained the necessary protection for funding approval while the seller was able to dispose of the asset without extended liability.

AGA Property Guarantee Resolution

A food manufacturing company was sold to an overseas trade buyer. The company had historically entered into an Authorised Guarantee Agreement (AGA) as part of its lease obligations for a former site. The buyer was unwilling to assume this residual liability and demanded a specific indemnity or insurance solution to address the risk of tenant default. A bespoke guarantor’s liability policy was arranged to sit alongside a W&I policy, both paid for by the seller. The combination of these covers enabled the deal to close, mitigated the risk to the buyer, and allowed the release of a significant property-related retention held in escrow.

Care Home Buyout

A private equity buyer acquired a £80 million care home business through a secondary buyout. The CEO, who was exiting, offered only £3 million of warranty cover. The private equity seller refused to offer any protection. The buyer’s funding bank raised concerns about the limited warranty recourse, potentially jeopardising deal financing, however, a buyer-side W&I policy with a £5 million limit to “top up” the available coverage was placed. This reassured the bank, closed the gap between the purchase price and warranty cover, and ensured the transaction could proceed without delay.

How the W Denis W&I assessment process works:

Initial Assessment

W Denis works closely with clients to provide early-stage feedback on whether W&I insurance is viable and to estimate indicative pricing. To do this, we ask for:

• The target company name and registered address
• A short transaction summary including anticipated deal value, the buyer and seller structure, and rationale for the deal
• A draft or summary of the Heads of Terms or SPA (if available)
• The latest audited financial statements for the target
• Clarification of the desired policy structure (buyer-side or seller-side) and cover limits

Based on this information, we will approach specialist insurers under a non-disclosure agreement and seek non-binding indicative terms. These include an outline of premium cost, likely retentions, duration of cover, and key assumptions.

Underwriting & Due Diligence Review

Once full documentation is available—including the draft SPA, disclosure letter, diligence reports, and any tax deed— we coordinate underwriting with the selected insurer(s). A legal and financial review is undertaken (by insurer appointed external counsel), for which costs depend on jurisdiction and complexity. A call or meeting is arranged with the deal team to clarify diligence scope, transaction structuring, and any areas of insurer concern.

Binding the Policy

Upon satisfactory review, the insurer issues binding terms and a policy draft. Subject to final declarations, the policy is executed in line with deal completion. W Denis supports you through to binding and beyond, including in the event of any post-completion notifications or claims.

Timeline

Indicative terms can often be obtained within 2–3 working days. The underwriting process typically takes 5–10 business days depending on document readiness and deal complexity. For auction scenarios, accelerated timelines can be accommodated.

To discuss this further with a broker at W Denis, please make arrangements with Daniel Moss at [email protected] or on 0044 (0)113 2439812.