The Revista Electrónica de Direito of the Universidade do Porto has published the academic study by Filipe Santos Barata, in which he analyses the specificities of W&I insurance as a transactional risk mitigation tool and its impact on the M&A negotiation process of companies.

Gómez-Acebo & Pombo’s Corporate and Banking Counsel offers a detailed study of W&I Insurance as a facilitating instrument in the negotiation process for the acquisition of a controlling stake in a company.

The dynamics of M&A operations, or company mergers and acquisitions transactions, have evolved, maintaining a constant interest over time. These transactions, which require a complex and multidisciplinary process, are marked by high financial and personal expectations.

In recent years, W&I Insurance (Warrany and Indemnity Insurance) has gained prominence both domestically and internationally as a tool to mitigate transactional risks, thanks to the influence of international insurers and large corporate operations. This product, known as W&I Insurance in Europe and R&W in the US, is mainly used in the total acquisition of a company’s share capital. Thus, it is common during these corporate processes for the seller to provide assurances to the buyer on a wide range of issues relating to the target company, such as share ownership, ownership, employment, taxation, IP and other commercial issues.

Filipe’s study focuses on the general characteristics of insurance and its relationship to the negotiation process in acquisitions, considering the complexity and high value of both. It examines its role in the negotiation between the parties, and how it influences the due diligence process and the warranty clause in the purchase contract. To the extent that insurance seeks to cover the risk of misrepresentation, it also transforms the traditional dynamics of negotiation and risk management in business transactions.

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