May 18, 2023
D&O Insurance in IPOs and Direct Listings
It’s safe to say there’s a lot at stake in the Slack direct listing appeal, which we’ve blogged about repeatedly here since it’s one for the books. This insight from Woodruff Sawyer identifies a related area that would be impacted by the decision—the D&O insurance market. Here’s an excerpt:
D&O insurance carriers have, to date, treated direct listings much like traditional IPOs. This is to say that the price of D&O insurance whether going public through a direct listing or a traditional IPO has been the same.
If Slack prevails, however, there will be an argument that direct listings should be able to pay less for D&O insurance than IPO companies since they do not have to worry about Section 11 liability.
On the other hand, if Slack loses, the consequences could go further than just direct listings.
In the meantime, for any companies looking to go public when things start to look up, check out these 2023 editions of Woodruff Sawyer’s Guides to D&O Insurance for IPOs and Direct Listings and for Foreign IPOs and Direct Listings, with interactive timelines and key considerations and recommendations on topics including private company coverage, local D&O policies and cyber coverage.
– Meredith Ervine