Can Transaction Based Insurance Solve Deal Jitters?
- Topics:
- Mergers
- Tags:
- Business Operations,
- Mergers & Acquisitions,
- M&A,
- Investment,
- Insurance,
- Financial Planning,
- Finance,
- Deals,
- Corporate Insurance,
- Transaction
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Overview: Whether because of jitters about the economy, deepening uncertainty about values or just a pervasive sense, dividing and allocating risks among the parties to M&A transactions is becoming more difficult, especially in the private equity context. Deals are harder to finance and are taking longer to close, and diligence obstacles are looming larger. Buyers want larger escrows and higher caps. On the other hand, sellers want more cash at closing and fewer contingent liabilities. The question this article tries to address is can transaction based insurance solve deal jitters? Taken as a whole, the M&A process is likely to identify and focus considerable attention on at least the various kinds of risks discussed in the article. Also, from the M&A lawyer’s perspective, transaction based insurance can inject a number of new issues into the deal. Thus, as the products become more common, and the early ones are tested by the passage of time, one anticipate that the market for transaction based risk insurance will mature and some of the uncertainties that now surround will recede.
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Format: PDF | Size: 311KB | Date: Jul 2002 | Pages: 3
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