Representation and Warranty Insurance For M&A Transactions

Buyers don’t want to assume any risk that hasn’t been named and enumerated, while sellers tend toward the view that a company is a “living and breathing business” and some unknowns are part of any deal. It’s a perennial source of friction in negotiations, and to smooth things out, both parties are turning to representation and warranty insurance (“RWI”), write Sheppard Mullin attorneys Larry Braun and Zachary Turke. RWI generally is coming cheaper and with better coverage these days, but it makes more sense for some kinds of deals than others.