How Tail and Go-Forward Coverage Work in M&As
Mergers and acquisitions may slow in volume during uncertain times, but the stakes for those leading the transition never let up. In fact, PwC reports that deal value in the insurance sector climbed to $30 billion in the first half of 2025 — proof that strategic consolidation is still very much in motion.
But while companies negotiate terms and chase growth, directors and officers face a different kind of challenge: personal liability exposure. When ownership shifts, claims can surface from both sides of the timeline — before and after the ink dries. That’s why smart deal teams rely on a well-structured blend of D&O insurance, combining tail and go-forward coverage to protect leadership across the transaction.
What Is Tail Coverage & Why Is It Needed in M&As?
When leadership changes hands, questions often arise about who is responsible for actions taken before the deal closed. Tail coverage exists to answer that.
Also known as an extended reporting period endorsement, tail coverage applies to claims made after a sale, merger, or restructuring. It protects directors and officers for actions they took while they were still in their roles, even if the claim comes in after they’ve left the company.
This coverage is especially critical for outgoing executives who no longer have an active policy in place after the transaction. In the context of D&O liability insurance, tail coverage ensures that former directors and officers aren’t left to defend themselves against lawsuits related to prior management decisions. Whether it’s a shareholder dispute, breach of fiduciary duty claim, or regulatory investigation, tail coverage can offer crucial protection during this vulnerable window.
Go-Forward Coverage: The Next Chapter
While tail coverage looks backward, go-forward coverage protects the new leadership moving ahead.
Once a transaction closes, go-forward D&O insurance covers the directors and officers of the surviving or newly formed entity for claims that arise from actions they take post-close. This policy is often structured to reflect the evolving risks of the new business, particularly if there are significant changes in operations, governance, or geographic footprint.
Go-forward coverage does not pick up where tail coverage leaves off. Rather, it covers different people, different roles, and different exposures. Without both policies, companies risk leaving major gaps in leadership protection.
Comparing Tail & Go-Forward Coverage
Although both forms of coverage fall under the D&O umbrella, their timing, triggers, and purpose differ:
- Tail coverage: Protects prior directors and officers for past acts, triggered by claims made after the transaction
- Go-forward coverage: Protects current leadership for new acts, triggered by claims that arise after closing
Think of them as bookends. Tail coverage closes out the old chapter, and go-forward coverage opens the new one. Together, they provide continuity in leadership protection and reduce the chances of unexpected legal exposure derailing a transaction.
What Businesses Should Consider Before a Transaction
The time to review your D&O insurance isn’t after the ink is dry — it’s well before.
Before finalizing a deal, companies should review the terms, limits, and exclusions of their existing policies. This includes understanding whether the current policy offers built-in tail options or if separate tail coverage needs to be purchased. Legal counsel and experienced insurance brokers should work in tandem to ensure there’s no lapse in protection.
Timeline matters, too. Tail coverage often needs to be secured before the deal closes, while go-forward policies should be in place as soon as the new leadership takes effect. Oakwood Risk provides a helpful breakdown of what D&O insurance actually covers, which is worth reviewing in the early stages of your deal.
Partner With Oakwood Risk to Navigate M&A Liability
At Oakwood Risk Insurance Solutions, we help companies take a strategic approach to D&O coverage during mergers, acquisitions, and corporate transitions. We understand how to align tail and go-forward coverage with the needs of both outgoing and incoming leadership, so that no one is left holding the bag when a claim surfaces.
With decades of experience and a client-first mindset, Oakwood Risk gives you clarity, confidence, and continuity during times of change. Contact us to discuss how we can help you protect your leadership team and safeguard your deal.
About Oakwood
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