M&A cover demand rising with bullish deals outlook – Gallagher Specialty

Gallagher Specialty has published its latest report into the global mergers and acquisitions (M&A) outlook and related M&A insurance market products.

The insurance market for global M&A is resilient and anticipating “a significant uptick” in the number of transactions in 2025, the broker highlighted in its review of 2024 and outlook for 2025.

Use of M&A insurance continues to increase, with the percentage of deals insured having risen each year for the last 10 years.

A more positive economic environment is translating quickly into the M&A space, Gallagher said.

The broker expects buyers to continue to exercise caution and look for maximum comfort through the deal-making process.

This M&A insurance landscape is set against a backdrop of much more favourable deal-making outlook in 2025, following the negative impact on deal flow in the first half of 2024

This period included widespread economic uncertainty and then a more upbeat second half of 2024 with sales preparations mounting and due diligence engagements increasing.

The broker described “pent up demand” and corporates turning to M&A to accelerate growth which has had “a bounce-back effect”.

The report breaks down the landscape for M&A and the insurance coverages pertaining to deals into geographic jurisdictions, with focuses on tax insurance, due diligence and contingent risk insurance.

Insurance capabilities for warranty & indemnity insurance (W&I) now exist in almost every sector and jurisdiction, with language and governing law “no longer an impediment”, Gallagher said.

Innovation in the W&I space continues, the paper said, with tax insurance and contingent risks insurance becoming “ever-more present”.

Tax insurance has had “a stellar year” with a record number of submissions coming to market, the broker’s report emphasised.

Deal levels and coverage levels have continued to swell, with insurance transactions ranging from the low hundreds of thousands to the tens of billions, noted the paper.

The market remains resilient and is anticipating a significant uptick in 2025, Gallagher concluded.

“Insurers now have the capabilities to underwrite W&I in almost every sector and jurisdiction, with language and governing law no longer being an impediment. Insurers continue to innovate in the known risk space, with Tax Insurance and Contingent Risk Insurance becoming ever-present, especially with buyers needing as much comfort as possible before pulling the trigger,” said the report.

The economic environment appears more positive than it has been for the last few years, which is translating quickly into the M&A world, said the paper.

The broker added: “Whilst we still expect buyers to exercise caution throughout deal processes, we do anticipate an uptick in the number of transactions throughout 2025. The use of M&A insurance continues to increase, with the % of deals insured rising every year for the last 10 years. Given the flexibility and innovation of the M&A insurance market, we only expect to see this percentage increase for many years to come.”