Representations and warranty insurance

Updates and insight from the Nixon Peabody team of Private Equity/M&A legal talent. This edition is curated by Amy O'Keefe.

Please join me in wishing a very happy birthday to our very own Greg O’Shaughnessy, who recently celebrated a milestone birthday. We love working with you, Greg, and are so proud to be your teammates!

Tip of the Week: Consider utilizing representations and warranty insurance (RWI) to lower risk and provide comfort and certainty on both sides of an M&A transaction.

• Competition is fierce in the RWI market these days and pricing for RWI has hit an all-time low with premiums averaging between 2.25%–2.4% of the coverage limit and retentions as low as 0.7% of enterprise value.
• RWI coverage has improved over the years, with underwriters becoming less likely to insist on a laundry-list of deal-specific exclusions.
• RWI insurers are chasing deals aggressively and are very willing to look at deals that were once considered too “small” for the RWI market (e.g., $50 EV and below—like well below).

Our team is very familiar with RWI issues, so please let us know if you have questions about the product and how to best utilize it to get deals done with less risk.

Insights: Healthcare trends we’re watching

• Joint ventures can provide access to capital but may open the door to regulatory scrutiny.
• Buyers and sellers are keeping an eye on interest rates and exploring revenue growth through both traditional M&A activities as well as joint ventures and options.
• Distressed transactions require extra caution to minimize risks.

Insights: Air, Land, Sea & Space Systems M&A Update

• Key trends that drove a 52.6% YoY increase in sector transaction volume in 2023, despite a broader decline in M&A activity.
• Priorities of the leading acquirer in the sector and outlook for consolidation activity in 2024.
• Details on the tailwinds supporting the two key subsegments that accounted for 75.3% of all sector M&A transactions in 2023.

This newsletter is intended as an information source for clients and friends of Nixon Peabody LLP. The content should not be construed as legal advice, and readers should not act upon information in this publication without professional counsel. This material may be considered advertising under certain rules of professional conduct. Copyright ? 2024 Nixon Peabody LLP. All rights reserved.