Mergers and acquisitions play a prominent role in the healthcare industry, increasing the risk of post-acquisition litigation. Companies involved in M&A activity may face backlash if the deal goes wrong. Representations & Warranties (R&W) is an insurance policy that protects buyers and sellers against financial losses from specific breaches of representations and warranties in the transaction agreement.
Coverable representations and warranties can include tax, environmental, litigation, contractual, financial, intellectual property, and other matters where the outcome is uncertain, unknown, or unknowable.
Representations & Warranties Insurance Policy Features
- Available to buyers and sellers in a transaction
- Helps facilitate mergers and acquisitions by protecting participants from unknown risks
- Extend the time frame for which specific problems are uncovered
- The buyer can purchase insurance to cover higher amounts than the cap the seller is willing to accept
- Can enable the seller to reduce or eliminate funds held in escrow
