Nobody Does an M&A Deal Hoping to File a Large Representation & Warranty Insurance Claim: Advantages and Pitfalls of Representation & Warranty Insurance

March 2021Insurance Insurance

Abstract

Representation and Warranty Insurance (“R&W Insurance”) was introduced into the market in the 1990’s, although recently it has taken the mergers and acquisitions (“M&A”) world by storm. This product has reached maturity , and as a result, every M&A practitioner should take the time to understand how it differentiates itself from traditional seller-backed indemnity regimes. While it shifts risk related to post-closing breaches of representations from the seller to the insurer, it does not fully replicate a seller-backed indemnity regime. For me, a profound difference between the two models is that R&W Insurance is a “product” sold by experienced professionals. This fundamental difference should impact how a M&A practitioner approaches R&W Insurance.

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Nobody Does an M&A Deal Hoping to File a Large Representation & Warranty Insurance Claim: Advantages and Pitfalls of Representation & Warranty Insurance

Abstract

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