Risk Partners Life Sciences Roundtable 2025, thank you very much!
Risk Partners Life Sciences Roundtable 2025, thank you very much!
Wenn Verkäufer oder Management keinen tragfähigen Garantiekatalog verantworten können oder wollen, wird der Garantiekatalog nicht oder nur in einem eng begrenzten Kern aus dem SPA gespiegelt. Er wird als eigenständiger, policenbasierter Garantiekatalog zwischen Käufer, Beratern und Versicherer verhandelt. Die Police schafft damit einen separaten Deckungsmechanismus für nicht bekannte Garantieverletzungen. Im Ergebnis muss der Garantiekatalog zur Due Diligence, zur Transaktionsstruktur und zur Schadenmechanik passen.
Distressed M&A
In insolvency and restructuring situations, operational guarantees are typically not provided, or are provided only in a greatly reduced form. Insolvency administrators, trustees, secured creditors, or financing banks in lender-led dispositions typically do not wish to create a liability position that goes beyond fundamental issues of disposition, title, or representation. Even liability limited to a nominal amount of 1 EUR does not completely resolve the issue, because the insurer’s rights of recourse in cases of fraud or deceit are typically not fully excluded. Even outside of insolvency—for example, in a turnaround acquisition prior to StaRUG proceedings or in the case of a seller with a hollowed-out balance sheet—there is often no guarantor who provides a viable liability source for the standard liability period.
From the seller's perspective, this structure can broaden the pool of bidders without requiring insolvency administrators, trustees, or creditor stakeholders to assume operational seller guarantees.
For buyers, this is not just a financial risk. Financial investors, lenders, and institutional investors, in particular, often require transparent assurance regarding key warranty areas for their investment committees, financing, or internal governance. If there is no seller liability whatsoever, this can not only make the acquisition more expensive but also complicate the approval of the transaction as a whole.
Synthetic W&I without Distress
Synthetic structures are no longer a phenomenon limited to distressed transactions. Increasingly, even solvent sellers in strategically managed processes are refusing to provide a comprehensive set of warranties in order to shorten negotiations, attract a larger number of bidders, or achieve a true clean exit without residual liability. This applies in particular to private equity exits, carve-outs from corporate structures, and secondary transactions, in which the financial seller has no operational knowledge of the target company and therefore cannot provide a reliable warranty.
Synthetic structures are often easier to assess for assets with a clearly definable risk profile and a manageable set of guarantees, such as real estate, infrastructure, or renewable energy transactions. The more operational, international, and labor-intensive the target is, the more its insurability depends on the scope and quality of the buyer’s due diligence.
The insolvency administrator typically sells the business operations without operational guarantees; any remaining commitments are typically limited to authority to dispose of assets, title, power of attorney, or a few transactional bases. The synthetic policy creates an independent right to coverage for the buyer with respect to the policy-based list of guarantees, based on the buyer’s due diligence, the data room, and, if applicable, the Q&A.
In share deals involving self-administration or protective shield arrangements, the seller remains capable of acting but is bound by procedural requirements and is often not a viable party to hold liable from an economic standpoint. A partially synthetic structure can supplement a narrowly defined core set of SPA warranties with policy-based warranties.
Financing banks manage the liquidation of a non-performing loan and sell it without assuming any guarantees. The policy provides the buyer with an independent coverage mechanism if the economically controlling lender is unwilling or unable to assume seller guarantees.
The seller still exists but, given its financial position, cannot provide a valid guarantee. Synthetic elements can create an independent insurance claim without making the purchase contingent solely on the seller’s financial capacity.
The financial seller has no operational knowledge of the target company and, accordingly, does not provide a verifiable list of warranties. A synthetic structure makes the buyer’s due diligence the central basis for underwriting when the seller or management does not provide a viable list of operational warranties.
A fund nearing the end of its term aims to fully liquidate its portfolio and distribute the proceeds to investors. A multi-year extended liability, an escrow arrangement, or a substantial retention often conflict with the goal of liquidation. Synthetic W&I can partially assume the economic function of seller liability and provide the buyer with a direct insurance claim without requiring the fund to be maintained as a viable liability entity beyond the liquidation process.
When there are a large number of co-shareholders—such as communities of heirs, widely dispersed minority shareholders, or a large number of co-investors—it is often impossible to identify a single party that is able or willing to provide binding guarantees for the entire company with sufficient knowledge. A synthetic structure does not eliminate this coordination problem on the seller’s side, but it can provide the buyer with an independent right to coverage against the insurer.
Synthetic W&I does not replace coverage for known turnaround or restructuring risks. Known tax, insolvency, accounting, or litigation-related risks are generally excluded from W&I coverage. If they can be sufficiently defined in legal and economic terms, they may be addressed—depending on the type of risk—through tax liability insurance, specific indemnity insurance, contingent risk insurance, or litigation/ATE structures. Synthetic W&I, on the other hand, takes a different approach: The list of warranties itself does not originate from the SPA but is agreed upon with the insurer on a policy basis and thus applies even if seller warranties are missing, reduced, or cannot be provided in a way that is economically viable.
Gegenüber der klassischen W&I-Versicherung: Bei der Standard-Police versichert der Versicherer einen im SPA von den Parteien verhandelten Garantiekatalog. Bei der synthetischen Police gibt es diesen Referenzpunkt nicht. Der Garantiekatalog wird unmittelbar zwischen Käufer (bzw. dessen Beratern) und Versicherer verhandelt und ist Bestandteil der Police, nicht des SPA. Man unterscheidet zwischen vollsynthetisch (das SPA enthält keine Garantien, der gesamte Katalog wird über die Police abgebildet) und teilsynthetisch (das SPA enthält einen reduzierten Garantiekern, ergänzt um zusätzliche, ausschließlich policenbasierte Garantien).
Gegenüber Tax Liability Insurance / synthetischer Steuerfreistellung: Steuerliche Risiken können in einer synthetischen W&I-Struktur über Tax Warranties oder eine synthetische Steuerfreistellung abgedeckt werden, soweit sie unbekannte Pre-Closing-Tax-Liabilities betreffen und durch Tax DD hinreichend geprüft wurden. Identifizierte Steuerpositionen, Transaktionssteuern oder konkrete steuerliche Streitfragen sind dagegen regelmäßig gesondert über Tax Liability Insurance oder eine Specific-Indemnity-Lösung zu prüfen.
Gegenüber Title Insurance: Eine synthetische W&I-Police ersetzt keine Title-Prüfung. Bei GmbH-Anteilen schützt § 16 Abs. 3 GmbHG nur innerhalb seiner engen Voraussetzungen; er beseitigt insbesondere nicht ohne Weiteres Belastungen, Verfügungsbeschränkungen oder aufschiebend bedingte Vorübertragungen. Bei fremdfinanzierten oder distressed Targets müssen Sicherungsrechte, Pfandrechte, Share Pledges, Zustimmungserfordernisse und Release-Mechaniken deshalb gesondert über Legal DD, SPA-Mechanik und gegebenenfalls Title Insurance abgesichert werden.
The difference from a standard W&I transaction is that there is no traditional disclosure letter—for which the seller is responsible—in relation to a list of warranties in the SPA. The underwriter therefore relies on the buyer’s due diligence, the VDR, the Q&A, and, where applicable, the vendor’s due diligence, legal, and tax fact book, as well as on a comparison between the synthetic list of warranties and the information that has actually been reviewed.
| Parameters | Design |
| Policyholder | Buyer (Buy-Side) |
| Warranty Catalog | Fully or partially policy-based, negotiated between the buyer/advisors and the insurer. |
| Damage Mechanics | Must be coordinated with the purchase price mechanism prior to the transaction, particularly with regard to the enterprise value/equity value bridge, leakage, debt/cash, working capital, de minimis, basket, retention, and the allocation of benefits or cash flows. |
| Disclosure Mechanism | References to appendices/disclosure schedules are replaced by references to the virtual data room (VDR) or specific VDR folders. Since the VDR is thus itself part of the underwriting and disclosure mechanism, a “non-disclosure of VDR” structure is generally not available for synthetic guarantees. |
| Effective Date of the Guarantees | Synthetic warranties typically apply at the signing stage. They can only be reinstated at closing if a separate bring-down, Q&A, or no-claims mechanism is agreed upon. For title warranties, a different solution may be possible depending on the transaction structure and the insurer’s appetite. |
| Knowledge Concept | Warranties that are qualified under “Seller’s Knowledge” and for which no “Knowledge Scrape” is offered, or that are deemed to be knowledge-qualified for the purposes of the policy, are not insurable on a synthetic basis. |
| Underwriting Process | Sometimes required: a brief Q&A with the (asset) management team by the buyer 1–2 days before signing, depending on the insurer. |
| Deductible / De Minimis | Often above the standard W&I level or less flexible; depending on the depth of due diligence, risk profile, sector, and the insurer’s appetite. |
| Bonus | For purely synthetic structures without specific distressed or complexity drivers, coverage is often close to the standard W&I level; for distressed-driven deals or cases where insurers have limited appetite, coverage typically includes an uplift. |
| Subrogation against the Seller | Generally limited to fraud or willful misconduct; often economically insignificant if there is no liable party with assets. |
| Underwriting Basis | Buyer due diligence; synthetic warranties refer to specific VDR folders rather than SPA disclosure schedules. |
With synthetic W&I, underwriting eligibility—not price—is the primary factor. Only a limited number of insurers underwrite warranty packages without seller liability. This results in a sequence that is often reversed in practice: The warranty catalog should be derived from the already commissioned DD scope, not the other way around. Anyone who first drafts a comprehensive catalog according to their wishes and then hopes to adjust the due diligence scope accordingly is negotiating for a policy that the insurer will trim down to the actual due diligence scope during underwriting anyway—resulting in a corresponding loss of time shortly before signing. When comparing multiple insurers, therefore, the relevant difference lies less in their general risk appetite and more in the question of how much coverage an insurer is actually willing to underwrite for a given due diligence scope.
Bei kleineren Distressed-Transaktionen kommt ein weiterer Punkt hinzu: Die für eine synthetische Police erforderliche DD-Tiefe muss wirtschaftlich zum Transaktionsvolumen passen. Ein niedriger Kaufpreis rechtfertigt nicht automatisch einen reduzierten Prüfungsstandard. Für den Versicherer bleibt entscheidend, ob der Garantiekatalog ausreichend geprüft und dokumentiert wurde. Ist das Budget für Legal, Tax, Financial oder Technical DD zu knapp, fehlt die Underwriting-Grundlage; das Problem liegt dann vor der Police, nicht in ihr.
Zusätzlich muss die Schadenmechanik vor Bindung feststehen. Weil der Garantiekatalog nicht aus dem SPA gespiegelt wird, fehlt häufig die dort austarierte Haftungsarchitektur aus Verkäufergarantien, Haftungsbegrenzungen und Kaufpreismechanik. Diese Lücke füllt im Schadenfall niemand automatisch nach. In der Praxis zeigt sich das daran, dass Police und Kaufvertrag denselben Sachverhalt unterschiedlich behandeln können: Ein wirtschaftlicher Nachteil ist kaufpreisseitig bereits über Working Capital, Leakage, Debt/Cash oder eine spezifische Kaufpreisanpassung erfasst, wird aber policeseitig zusätzlich als Garantieverletzung geltend gemacht; oder umgekehrt bleibt unklar, ob ein Schaden trotz kaufvertraglicher Anpassungsmechanik noch unter den versicherten Schadenbegriff fällt. Bleibt diese Schnittstelle bis zum Signing ungeklärt, entsteht im Schadenfall ein Bewertungs- und Anrechnungskonflikt.
Another critical issue is the timeline. Synthetic guarantees are typically insured only up to the signing date. Coverage through closing requires an additional bring-down, Q&A, or no-claims mechanism and is not a given, especially in distressed transactions. In the event of a longer interim period, a decision must therefore be made before committing to the deal as to whether this risk will be accepted, mitigated contractually, or negotiated separately with the insurer.
Diese Punkte lassen sich nicht nachträglich in eine fertig verhandelte Police einbauen. Wer die Strukturierung erst beginnt, wenn Katalogentwurf und DD-Beauftragung bereits auseinanderlaufen, verhandelt gegen die eigene Zeitachse und erhält im Ergebnis den Katalog, den der Versicherer zeichnen kann, nicht den, den die Transaktion braucht.
To make a reliable market assessment, the insurer needs not only access to the SPA and VDR, but also a verifiable comparison between the warranty schedule and the scope of due diligence. Of particular relevance are the transaction type, the status of the proceedings, drafts of the SPA and insurance policy, the VDR index, legal/financial/tax due diligence reports, the Q&A log, the legal/tax fact book or vendor due diligence, evidence of authority to dispose of assets, any approvals and consents, documents regarding collateral and releases, as well as a proposal for handling the signing and closing period.
The later the warranty schedule, the VDR-Scope, and the Q&A process are coordinated, the higher the risk that the insurer will underwrite only a reduced warranty schedule shortly before signing, or that the closing process can no longer be finalized in time. It therefore makes sense to involve the insurer no later than when it becomes apparent that the seller will not provide a warranty catalog in line with market standards or the due diligence scope has not yet been finalized.
Auf Käuferseite betrifft das vor allem Distressed- und Special-Situations-Investoren, Private-Equity- und Distressed-Debt-Fonds sowie strategische Käufer in Sanierungsprozessen, die ohne belastbaren Garantiegeber erwerben. Auf Verkäufer- und Verfahrensseite sind es Insolvenzverwalter, Sachwalter und Eigenverwaltungsorgane sowie besicherte Gläubiger in Lender-led Disposals, die eine Transaktion ermöglichen wollen, ohne eigene Haftung zu übernehmen. Für die begleitenden M&A-, Restrukturierungs- und Rechtsberater ist die Struktur relevant, weil sie den Garantieteil des SPA von der Frage entkoppelt, wer haften kann.
How does Risk Partners provide support?
We are available on short notice to provide an initial assessment of the insurability, marketability, or structuring of a synthetic W&I solution.
Rufen Sie uns an unter der Nummer +49 160 92598958 oder schreiben Sie uns: dealinsurance@riskpartners.de.
This article is intended for general informational purposes only and does not constitute specific legal, tax, or insurance advice. Whether and to what extent insurance coverage is available depends on the specific facts of the case, a legal review, the insurers’ underwriting requirements, and the final terms of the policy.
