Reps and Warranties Insurance

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Jonathan Legge

In the following guest post, Jonathan Legge, Senior Vice President at RT ProExec, takes a look at the ways in which the Representations and Warranties (R&W) underwriting process should be adapted to meet the needs of “strategic” R&W insurance buyers. I would like to thank Jon for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Jon’s article.
Continue Reading Guest Post: The R&W Process for Strategic Buyers

As I have previously noted (most recently here), Reps and Warranties Insurance is an increasingly indispensable part of M&A deals.  While this observation has been true for some time now, a competitive marketplace for Reps and Warranties Insurance has increased the relevance and significance of the insurance as part of corporate deal-making. An interesting December 11, 2017 Harvard Law School Forum on Corporate Governance and Financial Regulation article entitled “Representations and Warranties Insurance in M&A Transactions” (here) takes a look at the current state of play for Reps & Warranties Insurance in the M&A arena and examines the benefits the insurance affords for M&A transaction parties. The article also examines the insurance’s limitations as well as possible ways to address these constraints.
Continue Reading The Increasing Importance of Reps and Warranties Insurance in M&A Deals

randwInsurance to protect against breaches of the representations and warranties provisions of mergers and acquisitions purchase agreements is an increasingly important part of many M&A transactions. Among other things, reps and warranties insurance can help facilitate the transaction by reducing the amount of the purchase price that must be set aside to provide the buyer with indemnification protection against breaches of the representations and warranties. As detailed in a March 2, 2016 Law 360 article entitled “A Buyer’s Guide to Reps and Warranties Insurance” (here, subscription required) by Wayne Bradley and Jonathan Picard of the Dentons law firm, there are certain situations in which representations and warranties insurance may be particularly appropriate.  And as detailed in a recent study from a leading insurer, claims activity suggests that a significant number of transaction do run into trouble after the deal has closed, underscoring the need for this type of insurance.
Continue Reading Reps and Warranties Insurance: When Do You Need It – and What About the Claims?

paperstackRepresentations and warranties insurance has been around for years, but it is becoming an increasingly important part of M&A transactions, according to an August 24, 2015 Law 360 article (here). According to the article, more buyers are “embracing representations and warranties insurance” in order to “stand out in crowded auctions,” particularly where the seller is a private equity firm. The insurance product is “increasingly deemed a prerequisite toward sealing middle-market deals.”
Continue Reading Reps and Warranties Insurance: Increasingly Indispensable Part of M&A Deals

The purchase of reps and warranties insurance is an increasingly common element of mergers and acquisitions transactions. But while the uptake of reps and warranties insurance has increased, concerns remain about how a reps and warranties insurance will respond if a claim arises based on an allegation that a seller has breached a financial statement…

In recent years, the uptake for M&A representations and warranties insurance has increased. Just the same, even now, the participants in the M&A transaction often do not always fully understand what they need to know about the insurance. In particular, some transaction parties don’t always appreciate why they need reps and warranties insurance protection.

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Insurance to provide coverage for breaches of representations or warranties in M&A transaction documents has been available in the marketplace for several years, but the specialty insurance product has not always been fully understood. More recently, interest in the product has grown and the product has improved, and so take-up for the product has increased…