Off the back of the #MeToo movement, mergers and acquisitions advisors are starting to introduce "Weinstein warranties" and "harassment hold back amounts" into their deals.

When you're buying or investing in a company, you're not only buying the perks and goodwill but also the company's culture and any bad practices and behaviours. In the past, due diligence has focused predominantly on financial and legal investigations. Today, that isn't enough. Buyers (and investors) should also consider engaging in 'social' due diligence: to identify any misconduct or risk when taking on the company's culture. As we know, it only takes one allegation of sexual harassment to permanently damage a company's image.

The warranties sought to protect against sexual harassment claims can be as broad or as limited as necessary. Typically, the warranty is limited to senior management and founders, but it can capture anyone in the business who has engaged in inappropriate conduct. Where there is a real risk of a liability, advisors are even suggesting escrow or hold back amounts for a period of time after completion, to be available should a harassment claim pop up in the future for a liability that arose before completion.

Of course, such financial protections don't deal with any staff or general cultural problems, so buyers should consider reviewing the target company's anti-discrimination, harassment or bullying policies as well as making real inquiries into staff training and awareness to deal with the problem too.

While including a Weinstein warranty doesn't get rid of the problem, it's a move in the right direction. In such a male dominated industry it's good to see that M&A advisors, investors and buyers alike are starting to ask the right questions. After all, businesses are made up of people and it's the people who make or break the deal.