Are you covered? word written under torn brown paper.
The global M&A boom has spurred an increase in the use of representation and warranty insurance (“RWI”), which is designed to protect the insured party against breaches of a sellers’ representations and warranties in a corporate acquisition or merger agreement. RWI is increasingly used by buyers to differentiate their bids in an ultracompetitive marketplace, as well as by sellers look to maximize returns and minimize post-closing risk. A purchase agreement that incorporates a RWI policy…
A close-up of a highly stylized compass face. The compass needle has a blue arrowhead point and is pointed upwards to the word "insurance," which is printed in blue letters. To the left and right of the word "insurance" is the word "risk" printed three times in gray letters.
Note: This is the first in a series of posts that will discuss the use of RWI in Mergers & Acquisitions.
Essential to a buyer’s and seller’s evaluation of the purchase and sale of a company is the allocation of exposure between them for unknown risks and liabilities associated with the breach of representations and warranties in the purchase agreement, such as inventory reporting or products liability exposures. Less than two decades ago, very few…
