Tax Risks Insurance transfers a known, but uncertain, tax risk from a company’s balance sheet to an insurance Policy – it is used by both sell-side and buy-side during an M&A transaction and provides a quantifiable Tax Risk indemnity to the Policy Holder.
Why is Tax Risks Insurance used?
- Provides certainty and manages negative financial impacts by transforming potential tax liability into a quantified insurance cost for a Buyer
- Enhances or preserves the value of a business entity or asset
- Provides a clean “exit” for a Seller
- Enables a transaction when it is not possible, or desired to seek consent, from Tax authorities
- Removes a potential tax exposure from negotiations
- Removes the need for purchase price adjustments or for cash to be placed into escrow
Matrix assist our M&A, Private Equity and Corporate clients to structure, present to the insurance market, and then negotiate and place, Tax Risks Insurance across a wide range of jurisdictions and Tax authorities.