passion. innovation. accountability
PASSION. INNOVATION. ACCOUNTABILITY. BEECHER CARLSON
REPRESENTATIONS & WARRANTIES INSURANCE OVERVIEW Risk management without passion, and CONFIDENTIAL accountability is just buying insurance COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS innovation DOCUMENT CONTAINS AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
REPS & WARRANTIES Insurance Description Representations and warranties insurance helps protect a buyer or seller from financial losses resulting from inaccuracies of the representations and warranties made in connection with a variety of business transactions, especially mergers and acquisitions. Since transaction documents vary depending upon the nature of a particular transaction, each policy is crafted to meet the unique needs of a transaction and its representations and warranties. R&W Insurance can address roadblocks to completion of a transaction by: • Eliminating or reducing perceived or identified exposures that prevent completion of the transaction • Addressing disagreements on the allocation of financial risk for the perceived or identified exposures
COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
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REPS & WARRANTIES Insurance Purpose Why Buyers Request Coverage:
Why Sellers Request Coverage:
Enhance Amount/Duration of Indemnity
Distribute Sale Proceeds
Distinguish Bid in Auction
Increase Purchase Price
Ameliorate Collection Concerns
Supplement Disclosure Process
Protect Key Relationships
Protect Passive Sellers
Protect the Deal
Expedite Sale Process
Insure Certainty of Purchase Price
Reduce Contingent Liabilities
Address Stakeholder Concerns
Address Stakeholder Concerns
Provide Recourse When No Seller Indemnity Possible (public company sales, bankruptcy)
Attract Best Offers by Maximizing Indemnification
COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
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REPS & WARRANTIES Insurance Coverage Highlights Types of Policies • Buyer-Side Policy • Seller-Side Policy
Placement Process Prelim Client Discussion
Price of Coverage: Generally 2% to 4% of the limit of liability
Scope of Cover Policy is intended to provide coverage for claims: • arising from a breach of the reps and warranties. • referring to a fact or circumstance existing prior to closing. • resulting from unknown events at closing (“No claims declaration”).
Expense Agreement/Insurer DD Instruction
Deductible: Generally 1% to 2% of the Enterprise Value.
Coverage Candidates: $20 million to $1 billion in purchase price
Quotation & Policy Drafting
Policy Period: • Typically matches survival in underlying agreement • Can be extended beyond survival in underlying agreement up to maximum of 7 years
Process: Start to finish in 4 to 7 business days; No cost to obtain Non-Binding Indication Letter (NBIL)
Amount of Coverage: Up to $50 million for any one transaction; Larger programs can be structured with additional insurers
Market Submission
Non Binding Indications
Review & Discussion
Market Syndication
Declarations (No Claims)
Policy Incepts COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
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Contact
For assistance with the Transactional Insurance Programs, please contact: Glen Bailey, Managing Director, Beecher Carlson Executive Liability Practice | (678) 651-2204 [email protected] Disclaimer: The descriptions of insurance products are for discussion purposes only. They are not offers of insurance. The products offered by a particular insurer may change and may differ from these descriptions in material respects.
COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
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REPRESENTATIONS & WARRANTIES INSURANCE OVERVIEW Risk management without passion, and CONFIDENTIAL accountability is just buying insurance COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS innovation DOCUMENT CONTAINS AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
REPS & WARRANTIES Insurance Description Representations and warranties insurance helps protect a buyer or seller from financial losses resulting from inaccuracies of the representations and warranties made in connection with a variety of business transactions, especially mergers and acquisitions. Since transaction documents vary depending upon the nature of a particular transaction, each policy is crafted to meet the unique needs of a transaction and its representations and warranties. R&W Insurance can address roadblocks to completion of a transaction by: • Eliminating or reducing perceived or identified exposures that prevent completion of the transaction • Addressing disagreements on the allocation of financial risk for the perceived or identified exposures
COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
2
REPS & WARRANTIES Insurance Purpose Why Buyers Request Coverage:
Why Sellers Request Coverage:
Enhance Amount/Duration of Indemnity
Distribute Sale Proceeds
Distinguish Bid in Auction
Increase Purchase Price
Ameliorate Collection Concerns
Supplement Disclosure Process
Protect Key Relationships
Protect Passive Sellers
Protect the Deal
Expedite Sale Process
Insure Certainty of Purchase Price
Reduce Contingent Liabilities
Address Stakeholder Concerns
Address Stakeholder Concerns
Provide Recourse When No Seller Indemnity Possible (public company sales, bankruptcy)
Attract Best Offers by Maximizing Indemnification
COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
3
REPS & WARRANTIES Insurance Coverage Highlights Types of Policies • Buyer-Side Policy • Seller-Side Policy
Placement Process Prelim Client Discussion
Price of Coverage: Generally 2% to 4% of the limit of liability
Scope of Cover Policy is intended to provide coverage for claims: • arising from a breach of the reps and warranties. • referring to a fact or circumstance existing prior to closing. • resulting from unknown events at closing (“No claims declaration”).
Expense Agreement/Insurer DD Instruction
Deductible: Generally 1% to 2% of the Enterprise Value.
Coverage Candidates: $20 million to $1 billion in purchase price
Quotation & Policy Drafting
Policy Period: • Typically matches survival in underlying agreement • Can be extended beyond survival in underlying agreement up to maximum of 7 years
Process: Start to finish in 4 to 7 business days; No cost to obtain Non-Binding Indication Letter (NBIL)
Amount of Coverage: Up to $50 million for any one transaction; Larger programs can be structured with additional insurers
Market Submission
Non Binding Indications
Review & Discussion
Market Syndication
Declarations (No Claims)
Policy Incepts COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
4
Contact
For assistance with the Transactional Insurance Programs, please contact: Glen Bailey, Managing Director, Beecher Carlson Executive Liability Practice | (678) 651-2204 [email protected] Disclaimer: The descriptions of insurance products are for discussion purposes only. They are not offers of insurance. The products offered by a particular insurer may change and may differ from these descriptions in material respects.
COPYRIGHT BEECHER CARLSON INSURANCE SERVICES, LLC; ALL RIGHTS RESERVED; THIS DOCUMENT CONTAINS CONFIDENTIAL AND PROPRIETARY INFORMATION AND MUST NOT BE DISSEMINATED WITHOUT PRIOR WRITTEN CONSENT FROM BEECHER CARLSON, LLC
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