Strong Momentum in Reps & Warranties
Equity Risk professionals have been particularly active in the past three years and are seeing robust R&W activity across various transactions.
Strong R&W Activity
- Equity Risk professionals have provided advisory services for numerous recent transactions.
- Equity Risk is consistently engaged on 10+ transactions with R&W components.
- R&W coverage is increasingly being used to replace most (and in some cases all) traditional indemnification and/or escrow to cover breaches of reps and warranties that would otherwise be provided for by Sellers’ under a private transaction agreement.
- Median transaction sizes of $100-250M with enterprise values reaching $2B.
The following representative case studies illustrate recent transactions where our professionals have added value:
Target: Privately owned software company acquired by a public technology company for $1.5 billion
Description: Seller side R&W insurance program placed to insure indemnity obligations (including IT/IP) of selling shareholders above escrow
Target: Privately owned food ingredients manufacturing operation acquired for $115 million by a foreign public company
Description: $20 million Buyer R&W policy purchased excess of $7 million escrow to provide foreign buyer with security on indemnification on acquisition from individual shareholders
Target: Private equity owned cable services business acquired by a private company for $94 million
Description: $15 million limit Seller R&W Policy purchased above the $2 million escrow
Target: Private equity owned window and door manufacturer acquired by a private company for $140 million
Description: $25 million limit Buyer R&W Policy purchased above $7 million escrow Foreign Strategic Public Company
Target: Privately owned financial services company acquired by a foreign public company for $300 million
Description: $50 million limit Buyer R&W Policy purchased by the Australian company in excess of $7.5 million escrow to secure indemnification
Target: Appliance manufacturing business acquired for $300 million
Description $15 million limit Buyer R&W Policy purchased with retention equal to the $3 million escrow
Target: Frozen Food Industry purchased for $130 million
Description: $20 million limit Buyer R&W Policy purchased with a retention of $2,000,000 dropping down to $750,000 after 16 months