M&A Down, Insurance Coverage Up

In the first half of 2012, mergers totaled $929.4 billion, down about 22 percent from the same period in 2011. At the same time, M&A insurance has increased. Policy limits for M&A insurance rose to $2.3 billion, a 35 percent increase. M&A insurance typically pays off if a seller misrepresents the position of the company. Such misrepresentations can include financial statement errors, errors about the customers of the company, or lying about the status of lawsuits or potential lawsuits. The buyer then may be able to file a M&A insurance claim for up to two years after the transaction.