REPRESENTATIONS AND WARRANTIES INSURANCE
What is representations and warranties insurance?
- Representations and warranties insurance (RWI) protects buyers and sellers from unknown risks and liabilities in M&A deals. RWI protects the insured from unknown breaches of representations and warranties made by sellers in an acquisition agreement.
Why do buyers and sellers value representations and warranties insurance?
- Increases cash that sellers receive at closing by reducing the amount set aside for an indemnity escrow
- Increases certainty for sellers by limiting indemnification obligations to buyers
- Helps buyers win the deal
- Protects relationships with management and sellers
- Provides credit protection for buyers and extended survival for protection
- Bridges the gap on deals at impasse
- Protects against unlikely liabilities
TAX LIABILITY INSURANCE
Tax liability insurance protects insureds against the risk that a transaction or tax structure fails to qualify under its intended tax treatment.
Common insured tax exposures include:
- Tax-free reorganizations, mergers and spin-offs
- Real estate transactions
- S corporations
- Partnership issues
- Energy tax credits
- Historic tax credits
- Net operating losses
CONTINGENT AND OTHER TRANSACTIONAL INSURANCE
Euclid Transactional provides coverage for contingent liabilities and transaction-related liabilities, including:
- Successor liability issues
- Fraudulent conveyance issues
- Other identified exposures