Representations and warranties insurance, or RWI, has been on the market for over 20 years but became an increasingly popular product for technology deals in recent years as tech deal makers became more familiar with it and premiums decreased. As it turned out, tech deals were particularly good candidates for RWI because of the inherent uncertainties presented by investments in early-stage technology companies.
As the market confronts a potential economic slowdown in 2023, the pace and frequency of tech deals — which accounted for about one quarter of the total value of deals in 2022 — may also slow down. This creates potential for RWI claim activity to rise because deal makers may be less focused on the next deal and more focused on maximizing value from existing deals. As a result, it is important for technology executives, investors and their advisers to understand how these policies work and what types of claims they cover.
Read the full Law360 article here, as Eric Larson explains the value and importance of RWI, the economic impact on RWI, advantages for buyers and sellers alike, and claims reporting and resolution.
