There are many articles, seminars and blogs available on the internet addressing the developments and mechanics of R&W insurance. Familiarity with the insurance product (terms and conditions, pricing and retentions and the marketplace) is only half of the picture. An understanding of the underlying M&A process and the documents is critical to understanding how the insurance works. The most critical document in the process is the Purchase & Sale Agreement (the PSA). The PSA lays out the transaction between the parties, including the seller’s R&W’s and the seller’s obligations arising from breaches of those Reps & Warranties. Both the reps as well as the indemnity obligations are heavily negotiated by the parties and heavily scrutinized by the insurers. Whether discussing the use of the insurance with prospects and clients or negotiating a program directly with the markets, understanding common terminology is necessary.
The following link will take the reader to an article published on Practical Law and authored by Howard T. Spilko, Esq., Partner and Co-Chair of the Corporate Department at Kramer Levin Naftalis & Frankel.
The article provides a comprehensive explanation of basic M&A terminology in a simple and user-friendly format. (Further resources are available by establishing an account with us.practicallaw.com as well.) We wanted to share this useful resource with our readers who may be looking for a basic primer on M&A terminology.