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In any M&A market, there comes a point at which the more interesting question is no longer whether deals are getting done, but how they are getting done. A market begins to show greater maturity not simply through volume or value, but through the sophistication of the structures parties are prepared to use in order to allocate risk, protect value and bring transactions to completion with greater precision.
Warranty and indemnity insurance sits squarely in that category.
Its use is not significant merely because it offers another layer of protection. More importantly, it reflects a shift in the expectations of buyers, sellers and advisers. It suggests a market in which transaction parties are increasingly willing to use tools associated with more developed M&A environments in order to manage risk in a more deliberate and commercially efficient way.
In the Greek context, that is worth noting. Where W&I insurance begins to appear more regularly in appropriate transactions, it is often a sign that the market is evolving not only in scale, but in technique. The legal work then becomes more exacting. The issue is no longer confined to the negotiation of warranties in the share purchase agreement. It extends to the relationship between diligence, disclosure, underwriting, residual seller exposure and the wider allocation of risk across the deal structure.
W&I insurance changes the discussion, but not the discipline
There is sometimes a temptation to treat W&I insurance as a device that softens negotiation or reduces the pressure on the parties. In well-structured transactions, it does neither. It changes the discussion, but it does not reduce the need for discipline.
The insurer will still look closely at the diligence process, the quality of disclosure and the underlying legal and commercial profile of the target. The SPA still needs to be negotiated with care. Warranties still need to be framed properly. The transaction still depends on a clear understanding of what risk is being transferred, what remains excluded and what the parties expect to happen if a problem emerges after closing.
For that reason, W&I insurance is not a substitute for careful legal work. It is a layer built on top of it. If the diligence is shallow, the disclosure process unclear or the drafting imprecise, the existence of the policy does not cure those weaknesses. In some cases, it merely exposes them more quickly.
The real advantage lies elsewhere. Where the deal has been prepared properly, W&I insurance can help align competing interests in a way that makes the transaction cleaner and more efficient.
The structure often reflects the balance between exit and protection
The attraction of W&I insurance is often easiest to understand in transactions where sellers want a cleaner exit and buyers want meaningful protection without creating an extended post-closing relationship built around residual liability.
That tension is familiar in many deals. Sellers, particularly financial sellers or exiting shareholders, may prefer certainty as to proceeds and limited continuing exposure. Buyers may accept that objective in principle while remaining unwilling to proceed without a robust mechanism for dealing with warranty breaches that emerge after completion. W&I insurance can bridge that gap, but only where the structure has been designed with clarity.
The important point is that this is not merely an insurance question. It is a transaction-architecture question. The use of W&I insurance affects how the SPA is negotiated, how disclosure is approached, how the liability regime is framed and what degree of residual exposure remains with the seller. It also affects deal dynamics more subtly by changing the tone of the negotiation. In the right circumstances, it allows parties to move away from an overly personalised liability discussion and towards a more structured allocation of risk.
That is one reason why the presence of W&I insurance can be a sign of market development. It reflects a more confident use of deal tools to manage tension without pretending that the underlying risk has disappeared.
Sophistication lies in knowing when the tool truly fits the deal
Not every transaction requires W&I insurance. Its presence does not make a deal sophisticated by itself. The real sophistication lies in understanding when the mechanism genuinely serves the transaction and when it does not.
That judgment depends on several factors: the character of the seller, the quality of the diligence process, the regulatory and operational profile of the business, the complexity of the target, the appetite of the market and the degree to which the parties seek a cleaner separation after closing. In some cases, the policy is well suited to the commercial objectives of the transaction. In others, it may add cost and complexity without producing a commensurate benefit.
This is where experienced legal judgement becomes especially important. W&I insurance should not be used as a mark of fashion. It should be used where it improves the structure of the deal and supports a more workable outcome for the parties. In a market like Greece, where transaction practice continues to develop in sophistication, that distinction matters. The value lies not in importing techniques from elsewhere for their own sake, but in applying them where they fit the realities of the transaction at hand.
Practical Implications
For buyers, sellers and investors considering the use of W&I insurance in Greek M&A, several points deserve careful attention.
- W&I insurance should be treated as part of the deal structure, not as an external add-on.
- The quality of diligence and disclosure remains central to the usefulness of the policy.
- The mechanism works best where it reflects a genuine commercial need for cleaner risk allocation between buyer and seller.
- The SPA, disclosure process and insurance position should be developed in a coordinated way.
- The presence of W&I insurance may signal a more mature market approach, but only where it has been chosen for a clear transactional reason.
As M&A markets develop, the most telling signs of sophistication often lie in the way risk is allocated rather than in the headline value of the transaction. W&I insurance is one of those signs. Used properly, it does not remove risk from the deal. It places it more intelligently.