Tailored W&I structures and synthetic warranties are changing the M&A landscape for Belgian entrepreneurs selling to private equity-backed consolidators, helping founders achieve a clean exit while maintaining deal certainty and transaction momentum.
In Belgium’s SME segment, private equity buy-and-build strategies are largely driven by independent entrepreneurs, family-owned businesses and practitioner-led firms who are rarely familiar with the mechanics of a modern M&A transaction. Terms like representations, warranties, disclosure letters and broad indemnity clauses belong to a world far removed from their day-to-day operations.
“Sellers often struggle to agree to a broad set of warranties required by PE-driven buyers,” says Joe Mathis, Director at Howden M&A Benelux, adding that negotiations on warranty scope cost time, money and goodwill. Sometimes it results in a buyer having to settle for weaker contractual protection than they would have liked.
W&I insurance can help bridge the negotiation gap: sellers receive a clean exit with full proceeds, while buyers can secure broad warranty protection backed by a third-party insurer.
In Belgian add-on acquisitions - often valued between €1.5 million and €5 million – traditional W&I insurance historically hit a financial wall. Insurers typically impose minimum insurance policy costs ranging between €80,000 and €100,000. On a smaller deal, that cost can be considered disproportionately high. “That gets a bit expensive if you’re seeking protection on a €1.5 million acquisition of a small physiotherapy or dental practice,” Mathis notes.
From single deals to a platform in Belgium
As add-on acquisitions become the most reliable value drivers for Belgium dealmakers, Howden M&A senior Associate Aimane Gannouf argues that making cover viable for this segment is entirely achievable. The key is a shift in perspective. Rather than treating each acquisition as a standalone transaction, W&I can be structured around the broader buy-and-build programme itself.
In practice, this mirrors how buy-and-build strategies already operate. Sponsors acquire a platform company and systematically add smaller businesses within the same sector. Belgian accounting firms, physiotherapy practices, dental groups and niche manufacturers have all experienced this form of consolidation in recent years, driven by the same objective: greater scale, operational efficiencies and a higher eventual exit value.
Insurance can follow the same trajectory. As buyers, brokers and insurers work together across multiple acquisitions within the same sector, they build a shared understanding of recurring risks. By the third or fourth add-on, the operational and regulatory risks are well-understood territory. “Thanks to this experience and knowledge of the sector and the buyer, we can quickly assess what is needed for each deal, such as due diligence requirements and pre-determined broad warranty catalogues with the insurer,” Gannouf explains. “We carry that knowledge forward into subsequent deals, resulting in lower premiums compared to individual transactions."
Two structures, one strategy
Howden M&A has used this knowledge to develop two insurance variants for companies with buy-and-build strategies – the choice depending on deal size and the structure of the acquisition programme.
The first is a framework agreement with a single insurer, with tiered discounts locked in across a series of transactions. The first deal sets the reference point; because Howden can already assess the risk profile from that first deal, subsequent transactions close faster.
“We will secure the lowest possible premiums on the first transaction by putting the insurer under competitive tension, then lock that rate in – with pre-agreed discount rates – for every subsequent transaction, to capture the economies of scale.” says Mathis.
For even smaller add-on acquisitions, Howden has a second solution: the limit pool. On day one, in consultation with the insurer, total coverage is established for all acquisitions over the next two years. For each acquisition, a portion of that pool is subsequently allocated to the specific risks of that transaction.
“Say you have an insurance limit of €50 million,” Mathis illustrates. “With every transaction, you can allocate a portion of that amount to the risk of the specific next transaction. On a smaller acquisition with an enterprise value of only a few million euros, you might allocate cover for potential losses of up to €300,000.” That structure spares the client the full cost of placing a fresh policy for every deal, spreading the upfront cost across the programme instead. Two years is the practical ceiling for such a pool – legislative shifts, changing risk parameters and moving market conditions make anything longer unworkable, but Howden M&A sees that window as enough runway for an ambitious acquisition programme with realistic insurance terms.
Synthethic warranties: the real game-changer
Reducing premium costs improves accessibility, but the most significant innovation for Belgian entrepreneurs may be the emergence of synthetic warranties. Drawing on knowledge built up across prior transactions in the same sector, an insurer may be willing to cover certain warranties even where they were not formally written into the purchase agreement. “Once we and the insurer have a clear picture of the risks and possess a proven set of warranties, we can apply that synthetically to future transactions,” Mathis says.
The insurer agrees to underwrite this pre-vetted set of “synthetic” warranties directly in the insurance policy, even if those warranties are omitted from the seller's sale and purchase agreement (SPA). The result is often a simpler SPA, reduced negotiation friction and a more straightforward liability framework for entrepreneurial sellers, while buyers continue to benefit from robust warranty protection through the policy.
For buyers, synthetic warranties can help maintain a consistent level of protection across multiple acquisitions, even where sellers are reluctant to provide extensive contractual warranties. For founders who may be unfamiliar with M&A processes, they can significantly reduce negotiation complexity by shifting the focus away from detailed liability discussions. In practice, that can help transactions move more efficiently while preserving the protections private equity sponsors require.
From broker to strategic partner
The effectiveness of synthetic warranties depends on accumulated knowledge. The more familiar an insurer becomes with a buyer, a sector and its recurring risks, the more comfortable it is extending innovative forms of coverage across future transactions.
This is one reason the role of the W&I broker is evolving beyond transaction support and towards strategic partnership. Rather than supporting individual transactions, brokers are increasingly becoming long-term strategic partners, involved much earlier in the acquisition journey to help design risk solutions that can be deployed across an entire platform.
“Buy-and-build is about repetition,” says Mathis. “The value compounds with each transaction. The better you understand the buyer, the sector and the recurring risks, the more efficiently future deals can be structured. At that point, you're no longer arranging a single policy, you're building a scalable risk framework for an entire platform.”
As that familiarity grows, insurers are also more willing to develop innovative solutions, including framework agreements, limit pools and synthetic warranties. What starts as a transaction-specific insurance product can gradually evolve into a broader tool for managing risk across a consolidation strategy.
“The earlier we're involved, the greater the impact we can make,” adds Gannouf. “Our focus shifts from protecting a single deal to supporting the platform as a whole. That ultimately delivers better coverage, greater efficiency and stronger outcomes for all parties involved.”
