Rep & Warranty is an abbreviation for Representation & Warranty. It is also referred to as a representation warranty. In recent years it has become widespread in securitization of assets, M & A, syndicated loans, and project finance. The seller guarantees various facts related to the transaction at the time of concluding the contract or closing the contract. In M & A repurchase and warranty teaching considers the contingent liabilities that have not been accrued for loss provision on the balance sheet of the transferor (the amount of loss that is uncertain or will be realized in the future can not be reasonably estimated) In order to ensure that the transfer company has no additional obligation to the acquirer. At that time, if a company aiming for transfer intends to develop a company sale, we guarantee that there is no corresponding deal in the additional obligation.
Obtain additional information that could not be obtained by M & A’s DD
Rep and warranty is widely recognized as synonymous with representation warranty. Additional information that could not be obtained by due diligence can be obtained and if there is false in facts expressed and warranted, it is subject to damages and can become a cause of cancellation of mergers and other such legal protection It is extremely useful for buyers in the sense that they can get it. Such a concept is called “Rep & Warranty”. The representation and warranty coverage is the shareholder relationship, security obligation, financial condition of the acquisition target company. For example, in the case of violation of representation or warranty, the counterparty will be subject to an indemnification clause enabling the cancellation of the contract and claims for damages. Until now, the buyer side wanted a rep and warrant tea to the seller side, but as M & A by the share exchange increases in the future, the seller will try to avoid the risk of price drop of the stock, in the future the seller side We will also seek to request representations and warranties from the buyer side, that is, demand for representation and warranties of the buyer side regarding the current business contents and future prospects of the buyer side.