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M&A transactions, while offering opportunities for growth and profitability, are replete with risk. Acquirers must take steps to mitigate these risks wherever possible, particularly in the current economic climate.

One important aspect of M&A risk management is due diligence. This process is used to examine various aspects of the target company, including its operations, financials, market, opportunities and growth potential. Skipping or skimming due diligence increases the risk of post-acquisition problems and failures.

Another key consideration for acquirers is M&A insurance. In recent years, a growing number of buyers have incorporated representations and warranties (R&W) insurance into their acquisition processes, showing broad adoption and acceptance of this dealmaking tool. More and more acquirers are turning to M&A insurance products to enhance their bids in an auction, manage transactional risks and cover potential losses. There has been a sharp rise in R&W insurance claims notifications since 2017, driven by breaches relating to financial statements, tax and compliance disputes in the global M&A market.

The R&W market will continue to grow and evolve in the coming years, becoming increasingly mainstream. Acquirers should seek an experienced advisory team to ensure the chosen insurance cover provides adequate protection.

Against this backdrop, Financier Worldwide turns to some of the leading lights in their field, who share their stories…

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