Representations usually refer to the past and present, and
warranties to the future.
R&Ws relate to aspects of a seller's business and/or
standing and are included in contracts to provide counterparties
with certainty and comfort around the target in an acquisition
context.
A simplified example of an R&W is where a seller provides
that there will be no material impact to the revenues generated by
the target during the period of time leading up to the sale and in
the first year of operations following the sale.
R&Ws are heavily negotiated as part of a typical acquisition
and are tailored to be deal-specific in many instances.
R&W insurance is transactional protection typically
purchased by the buyer in a given transaction, giving rise to a
claim where the seller breaches a covered representation and/or
warranty.
