Preview: March 10th IVCA Luncheon on ‘Representations and Warranties Insurance,’ Sponsored by Greenberg Traurig, LLP

March 4, 2015

One of the more popular transaction products to emerge in the last few years is Representations and Warranties (R & W) Insurance, for use in both strategic and reactive situations. The IVCA is presenting a luncheon on the topic, entitled “Representations and Warranties Insurance: A High-Level Summary and Market Update.” The luncheon will be sponsored and moderated by the international law firm Greenberg Traurig, LLP.
 
The IVCA and Greenberg Traurig got together to offer a preview of the luncheon, including some expectations of the R & W product, and backgrounds on the main panelists for the event.
 
IVCA: What are the origins of Greenberg Traurig LLP, and how did the firm evolve towards interacting with products like Representations and Warranties [R&W] Insurance?
 
Greenberg Traurig: Greenberg Traurig [GT] is an international law firm with approximately 1800 attorneys and governmental affairs professionals, in 37 commercial and government centers across the United States, and in Latin America, Europe, the Middle East and Asia. The Corporate & Securities Team brings together the strategic business, legal and market experience needed to manage and close the most complex transactions, as well as provide savvy yet practical counsel on day-to-day operations.
 
A few years ago, we started using R&W Insurance as a means of limiting exposure for our clients who were selling their businesses. It provided a unique way to reduce the need for an escrow, and give sellers more certainty that their proceeds would not be at risk from future indemnity claims. We then began using the product when we represented buyers as a way to one, distinguish our clients from others in competitive acquisition processes, and two, to help strengthen relationships between buyers and sellers who would be remaining with the business to operate it post closing  – it was a way to avoid fighting with your management team over indemnity claims.

IVCA: What company does Greenburg Traurig partner with on the insurance?
 
Greenberg Traurig: Allied World Assurance Company Holdings, AG, through its subsidiaries and brand known as Allied World, is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions.
 
After working on a number of Mergers and Acquisitions [M &A] transactions using the products, the team at Allied World approached us to start helping them with the underwriting diligence process, and since then we have been involved in a  great number of deals as underwriters’ counsel.  This puts GT in a unique position, since we have experience representing both the users of the policies as well as the issuers of the policies.  In the last 18 months the GT team has worked on over 60 transactions using R&W policies.
 
IVCA: How did R&W Insurance emerge? What were the factors that caused it to emerge? 
 
Greenberg Traurig: R&W insurance has been around for a long time, and was more commonly used in European transactions. In the U.S., there were concerns around costs and quality of coverage, but in recent years the terms of the policies and the costs have come down and the product has gained a lot of traction. It is now very common to see it used in the U.S. middle market M&A space. Often sellers will require – or strongly suggest – that buyers use it, or buyers will offer it as a way to appear more attractive to sellers.
 
IVCA: Is the R&W product becoming more popular in the U.S., since it began internationally? Are there any adjustment issues between domestic and international deals?
 
Greenberg Traurig: R&W insurance is becoming very popular in the U.S., but it also still has a strong presence in certain international markets. It is common in Europe and Australia, plus underwriters are starting to offer it more in certain South American jurisdictions.
 
Just as there are differences in what is considered a ‘market’ in a transaction, there are differences in the policies and the coverages offered in different jurisdictions. However, in certain circumstances, a U.S. buyer could get coverage that they would be used to seeing domestically and have it built into their international deals, but there are likely increased costs associated with that.

IVCA: What are the backgrounds of the moderator and panelists that will speak at the luncheon?
 
Greenberg Traurig: The moderator and the panelists are as follows...
 
Gary R. Silverman, Moderator – Shareholder in Greenberg Traurig’s Corporate & Securities Practice in the firm's Chicago office. Mr. Silverman has nearly three decades of experience in the structuring, negotiation and execution of Mergers and Acquisitions, joint ventures and private equity investments.
 
Peter H. Lieberman, Panelist – Co-Chair of Greenberg Traurig’s Corporate & Securities Practice, Chicago office. Mr. Lieberman has more than 20 years of broad experience in mergers and acquisitions, public company and hedge fund matters, in addition to the Private Equity, start-up and Venture Capital, and related securities regulation issues.
 
Aaron T. Slavens, Panelist – Shareholder in Greenberg Traurig’s Corporate & Securities Practice in the firm's Miami office. Mr. Slavens represents both public and private companies, including private equity funds and strategic investors, in a broad mergers and acquisitions practice.
 
Jeffrey Anderson, Panelist - Senior Vice President and Southeast Branch Manager of North American Mergers and Acquisitions at Allied World.

IVCA: Why will this luncheon be of value to both the membership of the IVCA and other interested parties? What information will be most valuable to that audience?
 
Greenberg Traurig: GT has unique experience in the R&W insurance space and this product is a growing trend in M&A transactions. This luncheon will give the audience a good understanding into the product, provide valuable insight into how the policies work and offer some matters to consider when evaluating their applicability and use.
 
There are still tickets available for the IVCA Luncheon on March 10th, 2015, “Representations and Warranties Insurance: A High-Level Summary and Market Update,” sponsored by Greenberg Traurig, LLC. Click here for details.