Anyone using newly available Reps and Warranties Insurance for USA SMBs?
October 05, 2022
by a professional from University of Southern California - Marshall School of Business in North Palm Beach, FL, USA
Experiences? Recommendations? Problems? Agents and carriers?
In residential real estate, lots of sellers pay for the buyer’s purchase of an extended home warranty to cover repairs of certain kinds of assets.
Anyone seeing business sellers doing it to help buyers be more confident in their acquisition?
from Harvard University in Omaha, NE, USA
In my limited experience (3 deals this year), there is a lot more due diligence required to secure a good RWI policy. This, of course, can drive up third-party advisor fees considerably, and the juice might not be worth the squeeze given the risk profile of the business. On sub-10 deals, I believe we can adequately paper the R&W and use the seller contingency as an offset backstop. This helps us from having to extend our DD period and put more burdens on the seller, meaning we're preventing the introduction of deal fatigue or time risks to the deal. For all cash deals, I'd probably seek a longer escrow period of the holdback.
I'm still in the early innings when it comes to RWI. It'll likely take a couple of more deals before I iron out the right approach.
I'm curious about others experience.
from University of Southern California in North Palm Beach, FL, USA
Acquirecover: https://acquirecover.com/
Some of us on the playing field need to know more about what to expect; what to watch out for; and what we’re actually getting with R&W insurance.
My bet is people think it covers what it won’t cover. Not good. We need a heads up alert.
Google: Transaction Liability Private Enterprise (TLPE) Insurance
Disclaimer: I don’t know enough about this topic. I’m merely sharing what I’ve discovered. Be careful.