Representations & Warranties Insurance in Acquisition Finance

Summary

This article discusses representations and warranties insurance in acquisition finance. In a typical acquisition financing, lenders will closely assess any possible risk exposure relating to the target as well as the protections against any associated losses that may be provided in the purchase agreement. Lenders have historically expected such protections to be made in some form of guarantee such as indemnity caps, escrow arrangements, or holdbacks of the purchase price. This article discusses the latest addition to this risk-management toolkit: representations and warranties insurance.