Warranty & Indemnity insurance has become an increasingly important part of the M&A toolkit, used not only to transfer risk but also to improve deal certainty, ease negotiations and, in some cases, preserve post-deal relationships.
Howden M&A has helped drive that shift, building its approach on the premise that W&I is most useful when considered early rather than bolted on at the end. Directors Fatima Mohemmed and Joe Mathis explain how that approach helped the firm establish a market leading position in the Benelux.
For those who may not know: Howden is the world's one of the largest employee-owned insurance broker, with more than 24,000 employees across dozens of countries. What sets the UK founded group apart is its ownership structure: around 30% of the business is owned by its employees.
“Everyone at every level of the organisation can buy shares, so we are all co-owners of the company,” says Joe Mathis, director of Howden M&A Benelux. In other words: skin in the game. “Because employees are shareholders, they have a direct stake in the company’s success – and that drives people to go the extra mile for clients.”
Within this large, entrepreneurial organisation, Howden M&A has a distinct identity: it is relatively small, relatively young, and deliberately structured differently from the rest of the group. Howden M&A began 17 years ago as a start-up within Howden, Mohemmed explains. The two founders set out to serve the M&A market with Warranty & Indemnity (W&I) insurance -but not through traditional insurance professionalswho were often unfamiliar with the realities of transaction dynamics.
At the time, W&I policies were largely off-the-shelf products that insurance advisers “tried to push through,” as Mathis puts it. The founders of Howden M&A took the opposite approach: the policy should follow the transaction. That requires people who can read an SPA, interpret a due diligence report, and understand why a particular warranty has been drafted in a specific way. They therefore recruited from the transaction world: “Lawyers, tax specialists, and Big Four advisers- specialists, in other words,” says Mathis. He himself worked as a lawyer for eight years before making the move to Howden M&A.
A bull’s-eye
Not only the products but also the process benefits from advisers who are deeply embedded in the M&A world. “The majority of policies are placed through lawyers involved in a deal,” says Mohemmed. Logically so: W&I insurance has long been considered part of the legal workstream surrounding a transaction. Lawyers have therefore become the natural referral source. Howden aims to see to it that the insurance component does not run as a separate track alongside the legal and financial work, but integrates seamlessly into it. That requires people who speak the language of lawyers and understand the logic of due diligence, entirely in line with the approach Howden M&A has pursued from the outset.
The threshold for sellers to involve Howden early in the process is low. Howden works on a success-fee model and provides support during the preparation phase, in line with how the transaction process is run– for example, by a buyer or bidder. This is an unusual model in a market where advisers typically bill by the hour, but it reflects Howden’s philosophy of adding value throughout the entire process. It also makes it more attractive to bring Howden in at an early stage – not as a party that joins once the deal has already been structured, but as an adviser that helps think through how risks can best be allocated from the outset, and how insurance can support that
The approach of Howden M&A’s founders proved to be a bull’s-eye. In Europe alone, Howden M&A has grown into the one of the largest providers of W&I insurance in recent years. Its European network now comprises more than 150 specialists in countries across the Benelux, the Nordics, the United Kingdom, DACH, France, Italy, Iberia and CEE. That scale creates advantages that purely local players cannot match, particularly in cross-border transactions involving multiple legal systems.
Logical differentiation
The policies placed through Howden are becoming increasingly distinct from those offered by other brokers – a difference driven in part by Howden’s focus on high-quality bespoke solutions.
The core issue in an acquisition is universal:the buyer wants assurance that what is being acquired is what was promised, while the seller wants to close, receive the proceeds, and move on. Those interests can conflict. Without insurance, this usually means the seller must leave a substantial amount – sometimes twenty to thirty percent of the purchase price –in escrow for years as a buffer against potential warranty claims. An uncomfortable situation for the seller, who cannot fully deploy the proceeds towards a next investment. A W&I policy resolves this by redirecting the claims route from the seller to the insurer. The buyer retains protection; the seller retains freedom to move on. In addition, W&I insurance can shorten negotiations by moving part of the debate over warranties and definitions into the policy. And because the seller’s residual liability can be reduced to as little as €1, sellers may be willing to give broader warranties – increasing deal certainty.
There is also a relational argument in favour of the product that, in practice, often carries more weight than it may appear to on paper. “There is also an significant commercial advantage in not having to sue a repeat business partner for a warranty breach,” Mohemmed explains. In situations where the management team of the acquired company remains involved after the transaction – as is often the case in private equity deals – legal proceedings against the seller are not only costly, but can also damage the working relationship that has just been established . A claim against the insurer carries no such side effects.
Beyond the classic W&I policy, Howden M&A now also offers specialised cover for deal-specific risks, including as environmental and contingent risk solutions. One particularly notable development is the rise of what Mathis calls “synthetic” solutions. Traditional W&I insurance follows the risk allocation set out in the purchase agreement: the seller gives warranties, and the policy covers the event that those warranties prove incorrect. But there are situations in which the seller is either unable or unwilling to give any warranties at all.
“Synthetic, in this context, means that the seller simply cannot or will not bear any liability,” Mathis explains. This arises, for example, in distressed transactions, where a liquidator is involved in the deal and cannot legally assume liability,or in fund wind-downs, where the selling entity ceases to exist after closing. In such cases, the warranties are provided entirely through the policy, without the purchase agreement needing to include any liability for them. The SPA remains “clean,” while the buyer still retains recourse – against the insurer.
Market leader in the Benelux
In the Benelux, the team has grown from virtually zero market share at its launch in 2018 to a clear market-leading position. The number of policies placed by Howden M&A Benelux has grown steadily in recent years. “All told, we have advised on more than a thousand deals over the past seven years,” says Mohemmed.
That volume gives Howden M&A an unusual level of market insight: the firm not only advises on individual transactions but also has visibility into the direction in which the market is moving. Mohemmed notes, for instance, that the W&I insurance market has broadened considerably in recent years. Corporates, family businesses, and winding-down funds – the range of situations in which the insurance adds value continues to expand, alongside the creativity with which the product is being applied.
Sector shifts are also notable. Financial services, for example, was still a niche area five years ago. “Back then, there were one or two deals involving a W&I policy; now there are more than twenty,” says Mohemmed. The healthcare sector remains active, average deal sizes in the Benelux have increased, and the real estate market – which went down after the Covid19- dip – is beginning to recover cautiously.
