Reps & Warranties insurance for small deals?

by a professional from University of Tulsa

3 months ago

Background: Deal attorney, used to work on big/middle market deals, now focus on sub $5M

Question: I have a lot of clients wanting to treat their sub $5M deals like the mid market or larger market deals. Sometimes they came from M&A at a big company or otherwise have that traditional larger viewpoint. Some of the things they expect are quite different (very rarely have stock purchases, diligence is very thorough, reps in the APA and indemnity are hotly negotiated) in the smaller space. Part of the reason for this (I am guessing) is that no one gets R&W insurance at this level. That alone changes the negotiation ecosystem considerably. 

Does anyone offer this insurance for sub-$5M deals? Has anyone explored it? I am assuming it's crazy expensive relative to deal size, but I don't like assuming.

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investor from University of Pennsylvania - The Wharton School

Adding to the above, I'm also aware of the small deal sell-side RWI policies being offered (only in the past 2 years or so). But I've never experienced or heard a reliable first-hand report of how well they work in practice, meaning when a claim is made. Any buyers or sellers have personal experience with making a claim under such coverage?

3 months ago | like reply | 0 likes

intermediary from The University of Chicago - Booth School of Business

For smaller deals, there are firms (generally UK firms) that provide RWI to sellers. This is different than larger deals. Cost is reasonable.
Contact
Patrick Stroth at --@----.com Khan at --@----.com

3 months ago | like reply | 1 like

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