Tag archives: Representations and Warranties Insurance

Representations and Warranties Insurance and COVID-19 Considerations

The use of representations and warranties insurance (RWI) has grown dramatically in recent years as buyers (and to a lesser extent, sellers) have increasingly relied on RWI to allocate risks and provide other benefits in M&A transactions. The COVID-19 pandemic and its economic impacts have led to significant uncertainty for buyers, as well as for the RWI insurers underwriting their transactions. However, as we have grown more knowledgeable about the effects of the pandemic, both the M&A market and RWI insurers have adapted to the meet the changing times.

What is RWI

RWI is used by transacting parties … Continue Reading

Dissecting MedTech M&A deals

As we previously reported, this year has seen a surge in healthcare-related M&A. Many of these transactions are in the medical technology industry, or MedTech. While the industry’s healthy profit margins and opportunities for growth have driven a flurry of activity, the potential for large rewards from MedTech acquisitions also comes with unique obstacles:

  • Regulatory compliance: The healthcare industry is heavily regulated, with recent privacy legislation requiring stricter due diligence practices. Medtech companies often collect sensitive user data and in addition to conducting cybersecurity due diligence, buyers must ensure that the target’s data collection policies and practices
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Key findings: 2018 SRS Acquiom Buy-Side Representations and Warranties Insurance (RWI) Deal Terms Study

SRS Acquiom recently published its first Buy-Side Representations and Warranties Insurance (RWI) Deal Terms Study. The study analyzed the terms of 588 private-target acquisitions that closed between 2015 and 2017, the majority of which are not required to be publicly disclosed. As Canadian M&A deals continue to use RWI at an increasing pace, insights from firms such as SRS Acquiom offer valuable perspective on popular terms in RWI covered deals. Some of the study’s key findings are outlined below.

Financial terms

  • Escrow. One of the most pronounced effects of RWI coverage is the reduction in the amount of
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Frequency and size of M&A insurance claims continue to rise

AIG, in its recently published 2018 M&A Claims Report, explored the rising number of representations and warranties (R&W) claims in the M&A market by examining AIG policies written between 2011 and 2016. During this period, AIG wrote policies for approximately 2,000 deals, representing a total deal value of over $700 billion from which more than 400 claims have resulted as of the date of the report. The insurance provider observes trends in the frequency and size of claims based on deal size, industry sector and geography, and posits that R&W insurance has become the “new normal” in … Continue Reading

Reviewing the ABA 2017 Private Target M&A Deal Points Study: new RWI takeaways

For the first time, the American Bar Association’s Private Target Mergers and Acquisitions Deal Points Study (the Study) includes data points on the use of representation and warranties insurance in transactions. The Study analyses publicly available purchase agreements for transactions for which purchase agreements were executed and/or completed in 2016 and the first half of 2017 that involved private targets being acquired by public companies in the US (the Agreements).

Representations and warranties insurance (RWI) is a tool increasingly used by buyers and sellers in the context of mergers and acquisitions. As previously discussed on this … Continue Reading

AIG reports increased R&W insurance claims in the M&A market

AIG, in its recently published 2017 M&A Claims Report, explored the rising number of representations and warranties (R&W) claims in the M&A market by examining AIG policies written between 2011 and 2015.

Increase in R&W claims

Mary Duffy, AIG’s global head of M&A insurance, posits that the marked increase in claims could stem from buyers becoming more knowledgeable of R&W insurance policies. Darren Savage, AIG’s Asia-Pacific M&A manager, agrees that buyer familiarity, fostered by repeat business, has created sophisticated consumers who are thinking more critically.

Duffy also notes that larger deals are those facing the greatest claims … Continue Reading

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