Insuring M&A tax risks: practical considerations for buyers

Over the last decade warranty and indemnity (W&I) insurance has solidified its position as a key tool used by buyers to mitigate tax risks on M&A transactions. It has transitioned from a niche product used mainly in the private equity sphere to a common feature in corporate acquisitions.

Despite its increasing popularity misconceptions remain about the level of coverage provided by W&I insurance. W&I insurance often does not provide a complete solution on its own. In this article we seek to dispel some common misconceptions about W&I insurance and show how combining it with other tools in the tax practitioner’s toolbox can maximise protection for buyers.

Any references to ‘W&I insurance’ in this article are to buy-side insurance...