Representations and warranties (R&W) protect the buyer against hidden risks and irregularities in the target company.
R&W are statements made by the seller regarding the legal, financial, and operational condition of the company. If any of these statements prove untrue – for example, if undisclosed liabilities, disputes, or debts are revealed – the buyer may claim compensation from the seller.
In many deals, the parties also use Warranty & Indemnity (W&I) insurance, which provides an additional layer of protection. For the seller, it limits financial exposure by transferring the risk to the insurer. For the buyer, it simplifies and speeds up the claims process, making negotiations more efficient.
R&W therefore form a core element of every M&A transaction, building trust between the parties and reducing uncertainty about the true state of the company being acquired.
Get in touch with our M&A team at MFW Fiałek – we advise on transaction structuring, documentation, and negotiating R&W and W&I clauses