Founder playbook: what M&A insurance reveals about post-deal claims, consequences, mistakes, and misconduct.
By Sophia Tupolev, with Josh Begner, WTW
Claims & consequences. Founder mistakes vs. misconduct…. He’s seen it all. Insurance, of course, is there to help clean up the mess. But as a founder, long before a transaction, how do you set yourself up to avoid more of that?
Taking us into the chilling world of breaches and risk is THE guy who brought M&A insurance to Israel 5 years ago, Joshua Begner of WTW (NASDAQ: WTW). Josh decodes the data on M&As that spiral into lawsuits or insurance claims. We chart the tension between the operational reality for founders and their responsibilities to create processes that will protect their companies - and them - come transaction time.
We've sampled out some key insights for you from Episode 003 below. For the full episode, scroll to the end.
How do foreign acquirers see Israeli companies and our risk level today?
The answer is nuanced. Those who do business here regularly continue to do so, but the market has shrunk for first-time buyers of Israeli tech companies, evidenced by the number of deals Josh says have fallen over just in the last year.
A $30 mil valuation hole? Horror stories happen even with Big Four audited accounts.
Because they are only as good as the information you provided the auditor. Josh shares insurer data showing that just because you have audited accounts doesn't suddenly mean that there is no risk of breaches.
Buyers actually do sue the companies post-deal, here's for what.
The data on the most common breaches in M&A deals that lead to legal action by acquirers. The vast majority of claims are in relation to your financial position, your accounts, the compliance of accounts and your tax. According to WTW data, tax and financial breaches each comprise 20% of claims in 2023 and the 5 previous years. And representations around material contracts and compliance with laws can also lead to significant liabilities.
Who’s job is it to take care of compliance at the start? Usually it falls on the CEO.
Are you bringing on lawyers?
If you're saying you're too early to pay for legal advice, Josh offers a perspective on how to allocate your limited resources where it will matter the most.
How to protect your most important asset- in the case of early-stage tech companies, this is the IP, the code.
Zeevi breaks down how mistakes can bite you in the a$$ five years from now - like who works on it, the agreements they have or haven't signed, the machines they use, software licensing issues, and more.
It ain’t 2021 anymore, and that’s a good thing.
Need more? Check out the episode for:
How foreign investors view Israeli companies in today’s geopolitical landscape.
Mistakes vs. misconduct in high-stakes transactions
Key roles within a startup team thinking about their endgame on Day 1.
The influence of the risk-taking profile of Israeli founders on their companies’ vulnerability in transactions.
M&A’s continued dominance in Israel - and the market conditions affecting IPOs, with data from IVC Data and Insights
Listen:
Credits:
Produced by: Sophia Tupolev-Luz
Video and sound editing by: Yair Walden
Location: Google for Startups Campus Studio, Tel Aviv