W&I Insurance In Nigerian M&A And PE Exits: Market Practice, Coverage Gaps And Barriers To Access

Warranty and Indemnity (W&I) insurance has become an important risk allocation tool in modern M&A transactions, particularly in private equity exits and competitive auction processes. It enables transaction parties to transfer certain risks to insurers, support cleaner exits and reduce the likelihood of post closing disputes.

In Nigeria, however, adoption remains relatively limited despite the increasing sophistication of the M&A market. Factors such as limited underwriting appetite, smaller transaction sizes, pricing considerations and low familiarity with the product continue to restrict its use. As a result, Nigerian transactions often rely on traditional risk allocation mechanisms such as escrows, purchase price holdbacks, seller indemnities and earn out structures.In this article published in the PEVCA LRC Bulletin 05, Comfort (Agboola) Adekunle of Jackson, Etti & Edu explores the practical realities of W&I insurance in Nigerian M&A and private equity exits, including:

• the scope of W&I coverage and common exclusions;

• the importance of comprehensive due diligence;

• differences between Nigerian law and English law governed transactions;

• structural barriers affecting adoption in Nigeria; and

• practical and hybrid risk allocation solutions where W&I insurance is unavailable or limited.

The article highlights that while W&I insurance is a growing feature of Nigerian M&A, it remains most effective in larger, well structured and cross border transactions. Wider adoption will depend on stronger transaction readiness, earlier engagement with brokers and underwriters, and deal structures that align more closely with established underwriting frameworks.

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