Will You or Your Company be Protected by Your Liability Insurance After a Merger or Acquisition? B
Broker Perspective
Alison Tytherleigh
atytherleigh@
howdengroup.com
With so much to consider when firms go through a merger or acquisition, insurance often gets overlooked. Whilst specific products can be bought to manage the risk of the acquisition process it is also important to ensure day-to-day business and corporate governance activities remain covered.
A transactional situation is typically the most risky time for directors and companies with change of control, change of directors, and perhaps a change in direction – all of which impact shareholders, customers, competitors and other potential litigants.
In the event of a claim you or the company could be left without cover if you don’t clearly understand and meet the provisions of both the buyer’s and seller’s insurance policies. Insurers will nearly always deem a change in control a material fact and this should
be notified to both sets of insurers to avoid potential disputes in cover.
Whilst liability policies are written to cover claims or circumstances which you become aware of during the policy period, there may be no cover for personal or corporate liability relating to claims arising from acts by an acquired company unless you take action. The insurance of acts prior to and post-takeover are typically dealt with separately by insurers. Options for cover are summarised opposite.
Alison Tytherleigh has over 25 years’ experience in the professional risks insurance industry. Her career spans claims, operational and client advisory roles. She is currently responsible for the delivery of service to Howden’s Financial Institutions clients, which include “25% of BVCA membership and 36% of all UK headquartered private equity firms”.
58 Author Viewpoint
Risk and Insurance in Private Equity and M&A 2012/13
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