Popularity of W&I insurance in public company transactions keeps on growing
More and more investors in mergers and acquisitions (M&A) transactions on the Polish market are using warranty and indemnity (W&I) insurance, according to lawyers from the DLA Piper law firm and experts from the Marsh insurance broker. W&I insurance is most often used in the acquisition of private companies, but its popularity is also growing in the acquisition of public companies.
W&I insurance gives investors the opportunity for additional financial protection that goes beyond what the other party to the transaction is willing to offer. Although the decision to invest in a company is made after examining its legal and financial status, there is usually still a significant asymmetry of information between the parties to the transaction, which is to some extent mitigated by the representations and warranties made by the seller, which are intended to confirm the "quality" of the asset being sold. The W&I policy supports the transaction by guaranteeing the buyer effective protection if these representations and warranties prove to be untrue.
(WBJ)
