CFC’s transaction liability products are structured to protect buyers or sellers from financial loss arising as a result of inaccuracies in representations or warranties made in share or asset sale or purchase agreements. TL products are purchased by both buyers and sellers as they minimise seller liability on business exit, enhance bids by potential buyers, and match indemnification expectations between local and regional transaction parties. Some of the policy features are listed below:
Minimise seller liability on exit from a business.
Buyers can request a lower indemnity cap of a seller thereby making their bid more attractive.
Gaps in expectations
National or regional business practice can lead to a mis-match between buyer and seller indemnification expectations.
Reluctance to sue warrantors
It can be undesirable to pursue warrantors if they remain involved in the business, or if a buyer is a serial acquirer in a small sector.
Limited seller security
Sellers incorporated in unfamiliar jurisdictions or with limited post disposal business plans may not represent the preferred route for warranty breach claims.
Owner managed businesses can secure their proceeds earlier and permit prompt estate planning.
Breach of warranties
Our policy provides cover for financial loss arising from a breach of representation or warranties within an M&A acquisition agreement.