R&W insurance protects buyers and sellers in corporate transactions. It covers breaches of representations and warranties in the agreement.
A R&W policy can increase bid appeal, extend duration, improve protection, and raise chances of winning a case.
R&W insurance can improve the deal, reduce indemnity for contract breaches, provide a cleaner exit, and offer broader coverage.
An R&W insurance policy simplifies and speeds up negotiations for acquisition agreements. It also provides more coverage than traditional agreements.
Mergers and acquisitions are increasing. While effective, they also carry risks. Inaccurate representation by the seller or breach of agreement can lead to financial loss and lawsuits.
R&W insurance benefits buyers and sellers by providing capital for legal fees and settlements, protecting both parties from expensive litigation. It can also serve as a useful negotiating tool, leading to more lenient indemnification terms or their complete removal.
Over 790,000 company transactions have been announced since 2000, with a total known value exceeding $57 trillion, showing no signs of slowing down.
42% of US executives plan to pursue nontraditional M&A deals due to economic and political uncertainty. Therefore, R&W insurance will be even more vital to navigate through uncharted waters.
As the pandemic hit, M&A activities stopped. But now, almost two-thirds of businesses are more keen on M&A deals than before the pandemic.
Check your policy to see what’s covered by Representations & Warranties insurance. Typically, it covers scenarios like these.
R&W insurance covers breaches of general representations and warranties in a purchase agreement.
Seller is responsible for incorrect financials covered in pre-closing tax indemnities.
A buyer’s policy covers seller fraud.
Here’s a claim example that illustrates what Representation & Warranties Insurance covers:
Inaccurate representations by sellers can lead to costly lawsuits causing extensive legal disputes and financial strain for both parties. It is important for buyers and sellers to ensure accurate and truthful representations to avoid such legal battles.
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