How has the landscape of W&I insurance evolved over your 25 years in the field, particularly concerning M&A transactions. When I was first involved in the field of W&I claims, W&I insurance was virtually unheard of in the UK. It started in Australia some 20 years ago and has only been a real feature of the UK landscape in the last 15 years or so. Even at that time, it was comparatively rare with only half a dozen insurers initially offering W&I policies. In the last ten years, the W&I insurance sector has expanded apace and there are now some 30 to 40 insurers active in the W&I market in the UK. From our wider M&A experience of live transactions, it seems as though on most deals of significant size, it is the norm to at least explore W&I insurance, with some sectors such as real estate and private equity having been early advocates of using it. It is also notable that there is a big appetite for W&I insurance amongst overseas buyers of UK companies. Ultimately, once a court or tribunal has heard all the evidence and legal argument, a finding, and if appliable an award will be handed down. Accordingly, an expert’s testimony can be critical to the outcome. Can you describe your process when assessing a W&I claim in the context of postacquisition disputes? Our initial process when instructed to assess a W&I claim, whether on behalf of claimant or respondent, is to make sure that we have access to all the relevant key documentation, which will include the SPA and, if applicable, the W&I insurance policy. We will also seek to understand the background to and nature of the claim. This can lead to a range of followup investigatory actions, from the review of principal accounting documents, such as annual accounts, to a detailed forensic investigation into all the relevant underlying documentation (e.g. due diligence reports and contemporaneous evidence regarding the basis of valuation of the target). Once we have reviewed all the relevant financial and contractual documentation, we will, in discussion with the client and its lawyers, give an initial overview of our opinion as to the robustness of a claim and any potential weaknesses (from an accounting perspective). We will also provide an initial assessment of the potential range of loss. We will typically provide a preliminary report in advance of the discussion with the client and lawyers. From then on, the process we follow will depend on whether or not settlement can be reached, or whether the matter progresses to formal dispute resolution. Whichever way the matter progresses, we will work closely with the client and its lawyers, following the instructions of the latter as to what reports we need to prepare and meetings to hold with opposing expert accountants. 36 LAWYER MONTHLY DECEMBER 2024 Expert accounting support is crucial to assess the quality of evidence and determine the impact of warranty breaches on the value of the business.
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