Rep and Warranty Insurance
A policy that covers the buyer if they discover problems after closing — and lets you keep more of your sale price up front.
Representations and warranties are the formal promises a seller makes in the purchase agreement: the financials are accurate, no major lawsuits are pending, the contracts are valid, the taxes are paid, the customers are real. If any of those representations turns out to be false after closing, the buyer can come back to the seller for damages. Rep and warranty insurance — usually called "RWI" — is a policy that transfers most of that risk from the seller to an insurance company. The buyer (and sometimes the seller) pays a premium up front, and if a problem surfaces post-close, the insurer pays the buyer instead of the seller. RWI is standard on deals above roughly $5M in purchase price and increasingly common on smaller deals.
Rep and warranty insurance can shrink your holdback, cap your post-close exposure, and put more cash in your pocket at closing — but only if the deal is the right size and structure for it.
Buyers like rep and warranty insurance because chasing a seller for indemnification claims is expensive, slow, and often unsuccessful.
Find out what a buyer would see in your business — before you talk to one.
The Exit Desk free assessment takes 2 minutes. If you'd rather see what a full report looks like first, read a sample.
