M&A Minute: When R&W Insurance Works to Cover Interim Breaches

Woodruff Sawyer – Reps and warranties insurance (RWI) ensures the policyholder is covered for breach of contract for mergers and acquisition transactions. Failures in diligence or fraud on the part of the seller can result in breaches of the representations and warranties after an acquisition, whether intentional or unintentional, resulting in potential exposures for buyer and seller. RWI gets triggered when any of the seller’s representations or warranties given in a purchasing agreement prove to be incorrect, resulting in a loss to the buyer. There are two scenarios during the sale of the company when reps and warranties insurance are at play.

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