Solutions

At HWF we believe in a solution-led approach to meet clients' needs. Please click on the wheel below for information on a number of the solutions that we provide.


Once you have identified your solution, more information on the products that sit behind the solutions and the process for structuring them into a transaction can be found in the menu above.

Sellers

Warranty and Indemnity (“W&I”) Insurance can be used by sellers to manage the level of contractual liability they have under a SPA.

The choice of solution will depend on both the level of liability the seller is willing to assume under the SPA and the level of recourse required by a buyer.

For additional information, please click here

Liability cap protection

Where sellers are unable to negotiate a low cap on liability in the SPA or implement a clean exit structure, they can offset their liability cap via W&I insurance.

Different structures available include:

  • Seller gives a liability cap under the SPA and backs it up with Seller’s W&I Insurance to protect themselves; or
  • Seller gives a liability cap under the SPA and Buyer’s W&I Insurance provides recourse for the buyer head or in addition to the liability cap.

This is useful to enhance risk management, protect or remove the need for escrows and may allow distribution of proceeds.

For additional information, please click here

Structuring a clean exit

Sellers can use Buyer’s W&I Insurance to structure a sale process in a way that limits or remove their contractual liability.

In this instance the Buyer’s W&I Insurance is offered as or required to be the primary or sole recourse to bidders or the buyer in place of the more traditional, significant warranty cap.

  • Allows sellers to distribute sale proceeds
  • Maintains the competitiveness of a process with little or no impact on the deal value
  • Structure is flexible to the deal dynamics
  • Globally accepted by bidders

For additional information click here

Tax

Insurance solutions have become a useful tool to provide certainty when parties are exposed to potential tax liabilities.  Typical areas in which insurance can assist with such tax liabilities include:

  • M&A processes, including prior disposals/acquisitions;
  • Restructurings;
  • Reorganisations;
  • Company formation; and
  • General tax treatment during trading.

For more information click here

Trading issues

With tax authorities taking a more robust approach to corporate tax structures businesses need to maintain a cautious approach to their tax affairs. Where a business has concerns over its current or historic tax treatment it can look to offset this risk against insurance.

Alternatively, it may be the case that a business has a balance sheet provision for a particular tax issue and insurance can also be used to give certainty allowing the release of capital.

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Restructuring related

Corporate restructurings or re-organisations often give rise to potential tax implications. Absent clearance or comfort from a tax authority a Tax Liability Policy can provide protection where concerns exist around the tax treatment.

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M&A exposures

As a result of due diligence a buyer may identify potential tax liabilities that they are unwilling to assume and as such may require additional protection or indemnification.

A tax liability policy protects the insured from an adverse ruling by tax authorities; it can either insure the risk directly or can back a contractual indemnity.

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Known liabilities

It has become increasingly important for businesses to adequately deal with known or contingent liabilities. This is particularly the case during an M&A process or when a business is looking to release capital against a balance sheet provision.

Ring-fencing such liabilities using an insurance “wrapper” can provide the required certainty. Typical liabilities covered include:

• Litigation                 • Pensions
• Environmental         • Capital Release
• Property                  • Balance sheet provisions

For more information click here.

Contingent liabilities

Insurance can be used to offset the risks associated with specific known and unknown liabilities. The policy can either back an indemnity or insure the underlying issue directly.

For insurance to be a viable option the risk needs to be quantifiable and there needs to be a relatively low risk of an adverse determination. Insurers will require a risk assessment from appropriate advisors to support this.

For more information click here.

Environmental

Where environmental due diligence on a transaction has highlighted a potential environmental exposure, environmental insurance can be used to protect against this.

Such insurance policies can:

  • Cover both the historic and potential future liabilities
  • Attach to a site with the policy becoming an asset of the company
  • Provide tailored site-specific cover that is broader than wrapping a policy around a set of warranties

For more information click here.

Litigation /Appeal risk

Insurance can be used to provide against the adverse result of threatened or existing litigation.

In certain circumstances insurance may be available for matters that are being appealed having already received a favourable decision.

A policy can be used to either ‘ring fence’ an issue or provide catastrophe cover in excess of the likely outcome.

For more information click here.

Buyers

There are a number of reasons why a buyer may be unable to obtain, unwilling to negotiate or reluctant to rely on the traditional recourse under the SPA. Insurance offers an effective solution which provides buyers with comprehensive protection in the transaction.

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Bid differentiation

In an auction process Buyer’s W&I insurance is a useful way for a bidder to differentiate itself with the most competitive bid.

It allows a bidder to offer the seller a limited cap and/or more favourable seller protection provisions to replace the traditional contractual recourse.

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Enhanced protection

Buyer’s W&I Insurance provides an alternative or enhancement to the buyer’s recourse against the sellers.

Typical scenarios include:

  • Weak seller’s covenant;
  • seller is a fund which may liquidate post sale;
  • buying out of insolvency;
  • protecting ongoing relationship with management team;
  • investing in new territories or asset classes; and
  • corporate governance or lending requirements.

Buyer’s W&I Insurance can be structured to be the buyer’s sole recourse or run in parallel or in addition to a seller’s cap.

For additional information, please click here