R&W Insurance Facilitates Merger Deals

While the number of major corporate mergers and acquisitions hasslowed in the past year, business of all sizes, both public andprivate, continue to buy and sell assets. Regardless of the type of deal, thesetransactions generally include the seller making representationsand warranties with regard to the state of the business/asset beingsold. In recent years, insurance for representations and warrantieshas played an increasingly important role in facilitating manytypes of transactions. Many investment bankers and attorneysnegotiating mergers and acquisitions are using representations andwarranties insurance to facilitate the often contentious,time-consuming and possibly deal-breaking negotiations overindemnities, escrows and holdbacks, helping to break stalemates andclose the deals.

Representations and warranties are written factual statementsabout the acquired company buyers require from sellers as acondition of the purchase. The representations and warranties willtypically cover all aspects of the operations including areas suchas tax status, intellectual property, environmental compliance,employee benefit plans, financial statement accuracy, litigation,corporate authorization and title to property.