The global mergers and acquisitions (M&A) market has had a banner year. An improved business climate, significant government stimulus and cheap finance helped create a record year for mergers and acquisitions in 2021. Although a set of circumstances helped drive M&A performance in 2021, the trend is expected to continue this year. Despite an anticipated increase in interest rates amid rising inflation, global consultancies have forecasted activity will remain strong throughout 2022. In particular, ESG principles – an increasingly prominent element of many boardroom agendas – may generate a lot of deal activity going forward.
- 2021 proved to be a record year for M&A activity, which passed $5trn globally
- Improved business climate, low interest rates and government stimulus were key factors
- Although not world leaders, many emerging markets experience rapid M&A growth
- Despite an expected rise in rates and inflation, the trend is tipped to continue this year
Available to both buyers and sellers, the transactional insurance facilitates to protect the participants from risks that arise in connection with the underlying transaction. Transactional insurance is also know as Mergers & Acquisition (M&A) insurance.
While the M&A market remains hard to predict, relatively speaking, the Middle East is one of the regions in the world that is set for deal makers to continue to invest in the futuristic sectors that are well positioned to succeed.
What Does M&A Insurance Do?
- Facilitate mergers, acquisitions, divestitures and other business transactions.
- Provide access to the insurance industry’s capital and allow the transfer of certain transaction-related risks to the insurance markets.
Types of Transactional Insurance Products
- Representations & Warranties Insurance (R&W)
Protects a party from financial losses resulting from inaccuracies in the representations and warranties made about the target company or business in connection with transactions, including mergers, acquisitions and divestitures
- Tax Liability Insurance
Tax liability insurance enables the insured to reduce or eliminate a contingent tax exposure arising from tax treatment of a transaction, investment or other tax position where the underlying legal conclusions may be subject to future challenge by tax authorities
- Contingent Liability Insurance
Contingent Legal Risk Insurance covers identified or known contingent legal risks which are typically the subject of a specific indemnity in an M&A transaction. It may also be provided for identified “one-off” issues which are not necessarily related to an acquisition or a disposal. It can be used to facilitate a future deal, transfer risk or mitigate a contingent balance sheet exposure.
