M&A for sellers

You spent your life building a company. Now, you’re ready to sell…and you’ve got plans for “What’s Next” in your life.

You’ve found a willing buyer, ready to do a deal at your price, and you can picture yourself in your new life.

But there’s a problem…

The buyer wants to keep you “on the hook” legally and financially for the next several years, holding back a chunk of your money, just in case something happens.

You’ve run a great operation and you’re confident nothings going to happen to put the buyer at risk, but that doesn’t change the fact that the Buyer of your business won’t close the deal unless they’re protected.

Right now, that means a big pile of your money won’t be yours to invest, spend, or enjoy for several years. So, your big payout, isn’t nearly as big as it could be.

Not exactly what you envisioned as a clean exit…?

Not exactly what you envisioned as a clean exit…? You can’t imagine anything could possibly happen, but you don’t want to take the chance down the road, that Buyer may be coming for your money. So you struggle with either leaving millions of dollars of your money on the table (in escrow) in the hopes you’ll see it again, or taking on more personal indemnity risk than you’re comfortable with.

Your choices aren’t good ones…

You’ll either lose some or all of the money left in escrow, or you’ll face the devastating task of liquidating your retirement assets and legacy investments for your family to settle demands for a return of sale proceeds resulting from a breach of the Seller Representations and Warranties.

Until now, there’s only 2 ways for a breach of the reps and warranties can be handled:

  1. Buyer eats the loss
  2. Seller is on the hook to the buyer for the buyer’s loss

Now there’s a new way.

Buyers and sellers can transfer the indemnity obligation to a willing Trading Partner, one that has the experience to assess the risk and the financial resources to fully fund a loss. These Trading Partners are Insurance Companies, and the tool they use to take over the Indemnity obligation is in the form of a Representation and Warranty Policy (R&W).

Buyer’s like R&W’s as they have certainty of collection in the event of a breach. Sellers LOVE R&W because it gives them a clean exit from their transaction with more cash at closing.

IT’S NOT TOO GOOD TO BE TRUE
IT’S JUST TOO GOOD TO BE FREE

That’s why we exist…to liberate cash proceeds for sellers, so they can get almost all of their cash from day one, and at the same time, protect the Buyer’s interests even better than they’d be protected in the old escrow model.

I can’t understate the positive impact Business Owners bring to the World and it’s our mission to make a life-changing difference for them as they’ve done for us.

This site exists to help Business Owners, their investors and advisors make sense of the different ways to extract value from their firms and make life just a bit easier in the process.

There is a way for Business Owners to secure a clean exit from the sale of their companies, reducing or eliminating their indemnity risk while putting more money in their pockets than leaving it in escrow, where they may never see it again.

 

Contact Us

If you have a deal, and want to see how R&W can improve your deal terms, reach out and in a few hours, we can tell you whether your deal qualifies for R&W and how it will improve the terms. Then, you and your client can decide if it makes sense to add it.