Transferring Risk and Achieving a Smooth Exit: The Role of Reps and Warranties Insurance in M&A

About the Episode

Historically, reps and warranties insurance was only available to very large M&A transactions. In this episode, Patrick Stroth discusses how this product is now available to small and middle-market businesses. He explains that the objective is to provide sellers and buyers with a solution that is reliable and actionable and avoids conflict between the parties. The significant benefit for sellers is that they don’t need to deal with escrow accounts, legal disputes, or earnouts and experience a clean exit so that they can move on with the next chapter of their lives unencumbered. This episode is especially important for sellers who are tackling reps and warranties for the first time.

“Over 80% of the claims in rep and warranty, not just this product, but all rep and warranty are settled and paid within one year.”

Patrick Stroth

What You’ll Learn

• Seller’s peace of mind: Reps and warranties insurance can provide sellers with peace of mind and a cleaner exit by transferring risk from the seller to the insurance company.
• Scaled for the middle market: This type of insurance has existed for large M&A transactions for years. However, the traditional diligence underwriting made it too costly for smaller deals. This insurance fills that gap for small and  middle market deals (between $1-30 million).
• Reps and warranties insurance: What about the inclusions, exclusions, and processes for obtaining reps and warranties insurance,  and how crucial it is for sellers to navigate the M&A transaction successfully.

Topics Covered

Want More? Related Resources: 

• M&A Reps & Warranties | A Complete Guide
• Indemnification in Purchase Agreements | M&A Basics
• M&A Due Diligence | Checklist & Overview

Meet Our Guest

Patrick Stroth

National Practice Leader – Mergers & Acquisitions at Liberty Company Insurance Broker | Silicon Valley, CA

Patrick is a trusted authority in executive and transactional liability. Patrick’s M&A practice began by harnessing niche insurance tools to empower sellers of lower middle market companies to secure a clean exit from their M&A transactions faster and with significantly more cash at closing. This keen focus in the M&A space has earned Patrick the title “Champion of the Clean Exit.”

LinkedIn: https://www.linkedin.com/in/patrickstroth/