Representations & Warranties Insurance | FTI Consulting
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Representations & Warranties Insurance

Representations and warranties insurance (RWI) is becoming an increasingly common way for dealmakers to manage M&A risk by shifting liability that might arise from breaches of the seller’s representations and warranties discovered post-acquisition. RWI offers advantages for both buyers and sellers over traditional indemnity agreements that reserve a portion of the purchase price in escrow for a set time to cover potential costs from undisclosed liabilities and other purchase price overpayments.

Insurance companies need specialized financial industry experts to evaluate underwriting risk and quantify the value of a loss for RWI policies. Our experts can assist with disputes over RWI coverage exceptions and exclusions, analyze and respond to claims and, if necessary, provide expert testimony. Our underwriting and claims technicians, CPAs and credentialed valuation professionals provide insurers and insureds with expertise in RWI risks, coverage theories and claim quantification across all industries.

How We Help

Underwriting Services

We help identify red flags in a seller’s operations or financial results that could result in a potential breach, including:

  • Inventory overstatement
  • Overstated accounts receivable
  • Unrecorded liabilities
  • Improper revenue recognition
  • Understated cost of sales
  • Abnormal trends in material contracts and customer relationships
  • Other misstated expenses

Claims Services

We help insurers and insureds, and their legal counsel, navigate complex RWI claims and negotiate favorable settlements. We have advised in claims and disputes related to:

  • Working capital
  • Balance sheet and income statement values and adjustments
  • Fair market value and investment value
  • EBITDA & EBIT calculation and multiples
  • Earn-out and contingent purchase price calculations
  • Financial statement misrepresentation claims
  • GAAP and consistent application of accounting practices
  • Contractual valuation
  • Estimation techniques
  • Material adverse changes
  • Benefit-of-the bargain valuations, diminution-in-value and lost-profits damages
  • Valuation of lost customer relationships
More Info

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Key Contacts

Basil A. Imburgia

Senior Managing Director, Leader of North America Forensic and Litigation Consulting

Gary G. Kleinrichert

Senior Managing Director, Co-Leader of Forensic Accounting & Advisory Services

Wendy Shapss

Senior Managing Director, Co-Leader of Insurance Services