https://robfreeman.com/whatrepresent... If you are involved in a merger or acquisition to purchase a large company, you will be relying on certain statements (aka representations) made by the seller about the financial, and operating condition of the company as well as about its market value.

Buyers often want to hold back part of the purchase price in escrow to reduce the risk of surprises after a deal closes. However, negotiating the indemnification and escrow terms can create incremental friction between buyers and sellers in a competitive deal situation.

Representations and warranty insurance can enhance the mergers and acquisitions process, increasing the chances the deal will go through.

Representations and warranties insurance is a form of breach of contract insurance policy that can reduce risk to you in the purchase process. Reps and warranties insurance is also known as transactional risk insurance, or M&A insurance.

In exchange for a one time premium, representations and warranties insurance transfers indemnification risk away from the parties involved to an insurance company, thereby reducing friction between the buyer and the seller in the negotiation.

In a seller’s market, a reps & warranties insurance policy can reduce friction for a buyer by transferring risk away from the seller making the buyer’s offer more attractive in a bid.