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Corporate Finance & M&A

Representations and Warranties

Also called: reps and warranties, R&W insurance, warranties

Representations and warranties are the seller's contractual statements about the business — that the accounts are accurate, the contracts are valid, the taxes are paid. Breach gives the buyer a claim, usually capped and time-limited, and often secured by an escrow. Warranty and indemnity insurance has largely replaced escrows in larger deals, letting sellers walk away clean while the buyer retains protection.

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