Chipman Mazzucco Emerson LLC

How insurance impacts business acquisitions

Some business owners in Connecticut may find that it's beneficial to acquire other companies. However, it is important to complete due diligence prior to making an acquisition official. One step in the due diligence process is to look for any liabilities that the target may have. Once an acquisition becomes the official, the acquiring company generally becomes responsible for some or all of those liabilities.

In the event that the target doesn't have insurance or other protection against liabilities, that company could offer its own guarantee. After an acquisition or merger is complete, it might be a good idea to buy new insurance policies. Existing policies may also need to be modified to ensure that a business is properly protected after the transaction becomes final.

It can also be a good idea to review the insurance providers themselves when doing due diligence. This ensures that whoever is offering protection against liabilities is able to pay out if a claim is filed. If a claim cannot be covered in full, it could result in a company having to pay damages itself. Finally, it is important to determine if insurance policies could be voided in the event of a sale. This could be true if a policy has an anti-assignment clause attached to it.

Companies that are involved in a business acquisition may benefit from doing so with the help of an attorney. Other professionals might also be needed to complete the deal in a timely and thorough manner. These individuals could help to ensure that a deal is structured properly and that it is in the best interests of the acquiring company. An attorney may be helpful in dealing with regulatory or other issues that could arise during the merger or acquisition process.

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