Current trends for Warranties and Indemnities in M&A transactions

In this video, part of our M&A Deconstructed series, Justin Levine and Nick Davies discuss the current trends of warranties and indemnities in the context of M&A transactions. They explain that warranties are statements of fact given by a seller to a buyer to provide reassurance about certain matters affecting the company being sold. These warranties are typically found in the share sale and purchase agreement (SPA) and are heavily negotiated. Warranties can also be given as representations, which provide the buyer with additional remedies if the warranty is untrue or misleading. Indemnities, on the other hand, are specific obligations to compensate the buyer for identified risks, such as tax claims or issues. 

Nick and Justin emphasise the importance of sellers conducting pre-sale due diligence and addressing any issues upfront to mitigate the need for warranties and indemnities. They also discuss the limited occurrence of warranty claims and the potential use of warranty and indemnity insurance. Overall, they stress the need for sellers to have a knowledgeable legal team and to consider investing in pre-sale due diligence to ensure a smooth transaction and minimise risks.

Take a look at this in-depth discussion in the video

Connect with the M&A experts

Justin Levine, Managing Director, The NonExec Limited M&A Boutique 
Justin leads a boutique exit advisory firm specialising in manufacturing, technology, IT, digital, healthcare, wholesale and distribution markets. With the support of a 20-strong virtual team of analysts and researchers, he helps private business owners with growth and exit strategies. Connect with Justin >

Nick Davies, Partner and Specialist M&A Solicitor, Steele Raymond LLP
Nick acts for a wide range of business clients across various sectors, advising on complex corporate transactions including company sales, purchases and mergers. Nick also advises on on mergers, de-mergers and re-organisation. Connect with Nick >

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If you have any questions regarding your business, a business exit, a merger or any other corporate legal query, please contact Nick Davies on 01202 294566 or email [email protected]