Reps & Warranties Insurance
Reps & Warranties Insurance
Reps & Warranties insurance (RWI) is a transactional risk solution that protects the Insured (typically, the buyer) from losses due to breaches of the seller’s representations and warranties in the transaction agreement. Each policy is bespoke, with coverage ideally mirroring the reps and warranties in the transaction agreement, so long as it is fairly balanced.
R&W policies allow both buyers and sellers to reduce exposure and realize the benefits of the transaction.
Benefits to Buyer:
Buyer secures more protection (amount and duration) from an A-rated carrier than the Seller may be willing to provide
In a competitive situation, the Buyer’s bid is superior to other options that require Seller indemnity
Provides recourse in deals with a no-seller indemnity structure
Weigh in on diligence matters
Protects the relationship between Buyer and Seller post-transaction
Cost of insurance absorbed into transaction value
Protects equity investment in the Target company
Benefits to Seller:
Increased and immediate liquidity
Clean exit
Review and improve standard policy wording
Obtain best bids by maximizing indemnification
May improve bid values by participating in cost of policy
To learn more about Reps & Warranties insurance or to integrate these products into your next transaction, let’s talk.