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.
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Reps and Warranties Insurance: When Do You Need It – and What About the Claims?
Insurance 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.
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Reps and Warranties Insurance: Increasingly Indispensable Part of M&A Deals
Representations 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.”
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Reps and Warranties Insurance: Why it is Increasingly Common
Reps and Warranties insurance has been available for several years now, but there is no doubt that more recently there has been an increase in the product uptake. Indeed, according to an April 29, 2015 article from George Wang of the Haynes and Boone law firm (here), reps and warranties insurance “has gained
Reps and Warranties Insurance: Coverage for Diminution in Value Claims
The purchase of reps and warranties insurance is an increasingly common part of mergers and acquisitions transactions. However, a frequently recurring question with respect to this type of insurance is how it will respond if a claim arises based on an allegation that a seller has breached a financial statement warranty and the buyer is
Reps and Warranties Insurance: Multiple-Based Damages Claims
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
Reps and Warranties Insurance: Why You Need It
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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M&A Representations and Warranties Insurance:What Every Buyer and Seller Needs to Know
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