According to a recent American Bar Association (ABA) study, from 2020 through the first quarter of 2021, 65% of private M&A transaction agreements explicitly referred to RWI, up from 52% during the period from 2018-2019 and 29% during the period from 2016-2017. (Credit: Nuthawut/Adobe Stock)
When first introduced, representations and warranties insurance (RWI) proved attractive to parties to private merger & acquisition (M&A) transactions primarily because it allowed sellers to reduce their exposure to post-closing indemnity obligations arising from breaches of representations and warranties by transferring some of the risk to the insurer.
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