The most commonly used safeguards are seller representations and warranties, indemnity clauses, and escrow mechanisms.
In M&A transactions, buyers seek to minimize risks related to the acquired company. Standard protections include representations and warranties from the seller, ensuring that information about the company is accurate, as well as indemnity clauses obliging the seller to assume responsibility for specific identified risks. Increasingly, W&I insurance is also used, along with financial mechanisms such as escrow accounts or deferred payment of part of the price. These instruments provide the buyer with stronger protection against potential irregularities and give the possibility of obtaining compensation more easily.