Cooley on Rep & Warranty (R&W) Insurance

Previously, transaction insurance (or R&W insurance) was used sparingly and predominantly by East Coast private equity funds. PE funds have historically found R&W insurance to be attractive on the buy-side to enable them to make more competitive buyout bids for private targets by foregoing large escrows and significant post-closing indemnifications from targets. At the same time, when the PE fund is on the sell-side, it will insist that the buyer purchase R&W insurance to protect the fund’s risk exposure to breaches of representations and warranties by its portfolio company in the sale. Outside of the US, R&W insurance has already become widely used in private M&A deals in Europe by both PE funds and strategic buyers alike.

As the underwriting process has streamlined, and premiums have come down in the US, R&W insurance has secured a significant position in the M&A toolbox for middle-market M&A nationwide (outside of the PE context). Most financial buyers and now many strategic buyers increasingly use these policies as a means to manage risk and to help facilitate a deal.

via DealLawywers

Proxy Access Test Drive Hits a Wall

  • Cooley LLP, Proxy Access Test Drive Hits a Wall

NFG reminded GAMCO that a shareholder seeking to use proxy access must, under the terms of NFG’s proxy access bylaw, make certain representations and warranties, including a representation that the shareholder acquired the shares used to satisfy the proxy access eligibility threshold “in the ordinary course of business and not with the intent to change or influence control of the Corporation, and does not presently have such intent.” If the representation were not correct, NFG indicated, the shareholder would not be eligible to use proxy access.

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President-Elect Trump’s transition website promises to “dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.” To help our clients keep up with the reorientation of the financial regulatory framework, Davis Polk is launching a new blog, FinRegReform.com. Our most recent entry on the blog is our memorandum on Rep. Jeb Hensarling’s (R-TX) Financial CHOICE Act, introduced earlier this year, which we view as a starting point that signals a potential general direction of travel for financial reform. It is not the end, however, as we expect that the Republican Congress and Administration will have more ambitious plans for changes to the regulatory framework, and complex negotiations both within the Republican Party and with Democrats will further shape the ultimate result. The first post on our blog describes, in more technical detail, how a regulatory rollback might work.