The M&A Safety Net: Understanding RWI in Today’s Deal Market

Deals don’t usually fall apart because people can’t agree on the price. They stall during discussions about what happens after closing if a representation turns out to be wrong. That’s why we’re seeing representations and warranties insurance (RWI) show up in more conversations with buyers, sellers, private equity firms, and transaction attorneys, and why it’s becoming a practical tool for reducing post-closing uncertainty in mergers and acquisitions.

We’re joined by CRC Chicago specialists Josh Arnold and Rommel Mayuga to explain what RWI actually does, what it can cover, and why buyer-side placement has become so common. We also talk about the real deal mechanics: indemnity caps, survival periods, escrow pressure, and why a clean recovery source can remove friction when the parties are stuck.

As M&A activity rebounds in 2026, the RWI market is evolving as well. More carriers are willing to consider smaller and middle-market transactions, and underwriting has become more efficient, but diligence still drives the outcome. We share a practical example from the private equity world where consistent carrier relationships and early alignment helped speed indications and support a multi-acquisition strategy. If you’re a retail agent, our biggest guidance is simple: loop us in at the LOI or draft purchase agreement stage so we can help assess fit, anticipate diligence needs, and keep timelines from getting squeezed at the finish line.

Visit REDYIndex.com for critical pricing analysis and a snapshot of the marketplace.

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Transcript

Amanda Knight 0:22

Welcome back to Placing You First, the podcast where we help retail agents stay ahead of emerging trends and better serve their clients. I'm Amanda Knight.

Scott Gordon 0:33

And I'm Scott Gordon.

Amanda Knight 0:34

And today we're diving into a topic that's become kind of a big piece of the MA world over the last several years: representations and warranties insurance, otherwise

Why RWI Matters Now

Amanda Knight 0:45

known as RWI. If you've worked with buyers, sellers, private equity firms, or transaction attorneys lately, chances are you've heard more conversations revolving around RWI, and that is for good reason. As deal activity continues to rebound in 2026, RWI has evolved from this niche product into more of a mainstream tool that helps deals move faster and with less friction.

Scott Gordon 1:11

Less friction is good. To help us break it all down, we're joined by two specialists from CRC's Chicago office. Josh Arnold, who specializes in complex DNO, EO, and cyber risks, and Romel Mayuka, team leader and professional lines broker specializing in financial institutions and complex real estate risks.

Amanda Knight 1:32

This is the Placing You First Podcast from CRC Group. This podcast features news and insights from a vast knowledge base of more than 5,500 associates who write more than 30 billion in premium annually. Plus, we give you the latest information on what's happening at CRC.

Scott Gordon 1:49

It's the Placing You First Podcast.

Amanda Knight 1:52

And now the host of the podcast Amanda Knight and Scott Gordon.

Scott Gordon 1:56

Josh Rommel, thank you both for being with us today.

Rommel Mayuga 2:00

Thanks for having us.

Scott Gordon 2:01

Well, let's start simple for our listeners. For agents who may have heard the term but haven't been deeply involved in a transaction, what exactly is representations and warranties insurance?

Josh Arnold 2:13

At its core, reps and warranties insurance protects against financial loss resulting from a breach of the seller's representations and warranties in a mergers and acquisition agreement. In most current transactions, the policy is

What RWI Actually Covers

Josh Arnold 2:27

placed on the buyer side. That means if a representation turns out to be inaccurate after closing, the buyer can look to the reps and warranties policy for recovery rather than relying only on seller indemnity or escrow. The reps can cover a broad range of issues, things like financial statements, taxes, compliance with laws, material contracts, intellectual property, employment matters, and other areas depending on the deal and the purchase agreement themselves.

Amanda Knight 2:56

So in practical terms, this is really about helping reduce uncertainty after the deal closes, right?

Rommel Mayuga 3:05

Yeah, exactly. I mean, the practical value for reps and orders and insurance is really for both sides, managing any post-closing uncertainty. So for us, for sellers, you

How It Helps Buyers And Sellers

Rommel Mayuga 3:19

know, it can support a cleaner exit with less money tied up in escrow, uh, less exposure to any long tail indemnity claims for buyers. It provides a really good source for covery if a covered rep is breached. So this can be especially useful when a buyer and seller are stuck on indemnity caps, survival periods, any escrow amounts, or even concern about the seller's credit after uh after closing.

Scott Gordon 3:49

So it feels like this product has really accelerated into the mainstream. What changed?

Josh Arnold 3:54

Yeah, we see reps and warranties most often in the middle market and up and middle market transactions, but it has become more accessible for smaller deals as well. Um about three years ago, there was only I would say three

Why RWI Went Mainstream

Josh Arnold 4:11

carriers that wanted to look at what we call micro business, so I would say anything under 100 million in enterprise value. Now that marketplace has expanded uh to more than three carriers, there's up to ten carriers that probably take a look at the micro business. But the process has become more efficient, the market has more experience with the product, and underwriting is generally more streamlined than it was a year ago. That said, streamlined does not mean automatic. The quality of diligence still matters and it has a direct impact on whether the market offers clean terms or ads exclusions.

Amanda Knight 4:47

We mentioned in the article that goes along with this um podcast that we're kind of seeing a pickup in MA. Do you feel like that is still true in 2026 so far?

Rommel Mayuga 4:58

Yeah, I would say the economic conditions are actually ripe for it right now. We had a lot of dry powder that was sitting on the sidelines for quite some

Why Deal Activity Is Rising

Rommel Mayuga 5:10

time. Um, you know, have had some contacts in in the private equity um industry. We're we're really close with uh various private equity um resource groups around the country. And they had seen a slowing um down for quite some time. But you know, with the the new conditions, um the administration uh is a lot more pro-business. Um a lot of our private equity clients and the resource teams have seen deal flow activity increase, which means that we're we're definitely seeing more opportunities um across the entire eruption warranty space.

Amanda Knight 5:52

Well, and it seems like you know, sellers want a cleaner exit, buyers want protection, that speed and that certainty count for something. Um so it sounds like this is becoming more of a standard deal tool versus a specialty add-on, especially in that small to middle market space, like you guys just mentioned. So without naming names, can either of you walk us through a situation where RWI really helped facilitate a transaction that you're aware of?

Rommel Mayuga 6:24

Yeah, I mean, we've had a a number of recent situations. Um without naming names, we've and I'll have Josh go

Real World PE Roll Up Example

Rommel Mayuga 6:35

into uh some of the exact um uh specifics, but we've had uh a large um PE firm in which you know they were specializing in a certain class of business, certain type of uh licensed design professionals, and they were really looking to um you know use our expertise in reps and warranties along with you know our specialty in in design professional risks to optimize their portco programs. So I would say like for that particular insured, you know, both the the reps and warranties solutions along with um the program that we built on design professional side really helped, um really helped and ensure to to really gain a larger presence in the design professional space. Um Josh, could you touch on you know some of those um re transactions for that particular um PE sponsor?

Josh Arnold 7:47

Yeah, so um we were approached by our retail client, as Ramel mentioned, um, who has some solid relationships in the private equity space. And this specific private equity company was building out a architecture arm to their already large portfolio. They kind of built out an engineering arm, and they wanted to do the same thing with acquiring up to six architecture firms. We approached them, they they looped us in to do the reps um on one of the, I think it was the second deal that they had acquired, and we wrapped the reps and warranties up pretty quickly on that one, and they ended up looping us into doing um all the go forward insurance uh in our space, the financial line space as well. But the first one we did went very smooth. They were happy. What we did is we just leveraged the six acquisitions with one Rust Warranties carrier, um, so that the insurance side, including counsel, insurance themselves, the director of the P firm, and all of their team gets to know and learns how the underwriting team and their side works, and it's just become a good partnership for sure to do because you know we had a non-binding indication letter on the table within probably six hours after sending it in. Um and so when you get some synergy between all the PE firm and the insurance side and the carrier side, it makes things a lot more smoother and more efficient.

Amanda Knight 9:36

So conditions are creating both more deal activity and a favorable insurance environment. Would you guys say that's accurate?

Rommel Mayuga 9:45

Yeah, yeah. Given given the marketplace right now, it's it's definitely a favorable market, especially for um, I would say the the smaller transactions. So our

The Underserved Middle Market Gap

Rommel Mayuga 9:58

experience in this space is that you know a lot of the national resource groups out there, um, you'll have a PE team, you'll also have a separate specific MA team in which they're they're handling transactional um liability insurance for their for their insurers and clients. Um what we've seen as a trend line is most of those MA resource groups, most of those transactional groups, they really only have bandwidth, I would say, you know, 500 million and up in terms of transaction size. So, you know, the folks that we've been dealing with are our clients across the country. They really don't feel a love from some of those national resource groups. So, like for us and and CRC and for our team specifically, we fit in really well. Um, we can serve a role in the marketplace that you know we feel is is underserved. And that's what would maybe be considered like SME um transactional reps and warranties insurance. So yeah, there's definitely it's a good time to get in it, especially if you, you know, like we mentioned before, able to to really um solidify and develop a strong relationship with the PE sponsor. Um, just to add there, you know, Josh, my teammate here, you know, he is on speed dial with with the principal uh of that PE sponsor. So, you know, they know to to reach out to Josh if there's an imminent question. Um, and like, you know, as with with wholesale, with a lot of our really important clients. We're we're kind of like a a doctor, we're always on call. We know we have to, you know, be there to answer emails, phone calls at 6 30 in the morning and sometimes 9 30 at night.

Amanda Knight 11:52

So for agents who are listening and maybe they don't specialize in this space and obviously the way that that you guys do, which is why we make a great partner. Where should they start? Do you see them making mistakes in a certain area that we can address? Like what kind of mistakes can we help them avoid? Um, where should they start and and how should they talk with their clients

When Agents Should Loop In CRC

Amanda Knight 12:15

about this kind of coverage?

Josh Arnold 12:16

Um yeah, agents, I I would say retail agents should bring uh loop CRC in as soon as there is a letter of intent, uh LOI, uh or a draft purchase agreement, um, or any sort of serious transaction discussion um happening. The earlier we can be looped in, um, the better it is for everybody. The earlier we can start having conversations with underwriters on the deal, the faster we turn around a non-binding indication letter. Um we can help identify whether the transaction is a fit for revenge warranties, uh, what information underwriters will need, and what diligence areas may affect uh these specific terms. The right clients include business owners considering a sale, buyers acquiring a company, private equity backed clients, strategic acquirers, and clients going through recapitalizations or minority investments uh where reps and warranties are being negotiated.

Rommel Mayuga 13:17

Just to kind of piggyback off of there, we're seeing a trend line that you know, a lot of these middle market companies are are looking for an exit plan. So they may not have uh a succession plan within their um within their specific company. So, you know, the the option tree that we're seeing is that they're either selling to private equity or a lot of them are actually forming ESOPs. So that is a whole different topic of discussion. But um, yeah, there's the trend line that we're seeing is a lot of these mature businesses are are just looking for an exit strategy. So a lot of them are are going the private equity route, and that's a really good fit for for reps and warranties.

Josh Arnold 14:05

I would just say, you know, agents should not wait until the purchase agreement is finalized and signed. They should they should start to explore reps and warranties um right when there's discussion around a transaction.

Rommel Mayuga 14:20

Yeah, and some of the some things that we've seen recently is um, you know, they really should have third-party audited financials. There's a a pretty you know lengthy diligence process involved with these types of deals. And we've seen a handful of insurance again, these

Diligence Mistakes That Derail Terms

Rommel Mayuga 14:42

you know, ma and pa businesses that have grown and scaled over a decade, two decades, looking to sell, exit, don't have a succession plan, go to private equity. And like they've just been used to using internal financials for for quite some time. And for this, because you know, there is some pretty stringent um diligence review by various types of attorneys, you know, making sure that an insurance has audited financials, third-party CP audited financials is really important in the process as well.

Scott Gordon 15:13

So we're gonna uh do our final thing here,

Rapid Fire!

Scott Gordon 15:16

which we like to call rapid fire. Everyone gets to know our guests outside of the insurance world. It's three questions, just answer off the top of your head, and we'll start with Ramel and go to Josh. Okay, sound good? First question: what's the largest animal you think you could take in a fight?

Rommel Mayuga 15:34

Great question. I would probably say a koala bear.

Amanda Knight 15:41

From what I hear, they are supposed to be vicious.

Rommel Mayuga 15:45

They're supposed to be vicious. They're cute, they look cute, but they can they can pack a punch.

Amanda Knight 15:49

Yeah, don't be fooled.

Josh Arnold 15:50

I'm I'm gonna shoot for the stars here and say uh a coyote. There you go.

Scott Gordon 15:56

Wow. Uh that's ambitious, yeah. Okay.

Josh Arnold 15:59

It's gotta be a good day for me and a bad day for the coyote.

Amanda Knight 16:02

That's right.

Scott Gordon 16:03

Wow.

Amanda Knight 16:03

Exactly.

Scott Gordon 16:04

Uh that's ambitious.

Amanda Knight 16:05

You gotta have ideal conditions for that.

Scott Gordon 16:07

A second question. Uh, you only have three condiments for the rest of your life. What do you choose?

Rommel Mayuga 16:15

That is a great question. Yellow mustard is one for sure. Uh sriracha sauce is another. Man, third condiment. Um, that's really tough.

Amanda Knight 16:27

Maybe you only need two. Maybe you're just yeah, yeah.

Rommel Mayuga 16:31

I'd have to do soy sauce too, just if I'm having sushi somewhere.

Amanda Knight 16:35

There you go. All right, Josh, you're up. You get three.

Josh Arnold 16:40

I would I would definitely say ketchup. Um pretty much put on anything. Barbecue sauce and Frank's Red Hot Hot Sauce.

Amanda Knight 16:52

Perfect.

Scott Gordon 16:53

I love it. All right. Third and final question. What's a boring product that you're bougie about? Like generic just will not do for you. Your house needs something better.

Rommel Mayuga 17:06

You have to do nice toilet paper.

Amanda Knight 17:08

I do not disagree with that. You're not wrong there.

Josh Arnold 17:11

I I was gonna say the same thing, actually.

Amanda Knight 17:14

Yeah. Foundational.

Scott Gordon 17:17

Great minds.

Amanda Knight 17:18

Well, Josh and Ramel, thank you so much for joining us and helping simplify a topic that can feel intimidating. You've also been great sports. Um, it's becoming increasingly important for agents and their clients to understand RWI and when to call their wholesale brokers in. So we're really thankful you could join us today.

Rommel Mayuga 17:37

Thanks for having us. We appreciate it.

Scott Gordon 17:39

Thank you guys. Absolutely. Uh, we know you guys are busy. Uh, so thanks for joining us. And to our listeners, the big takeaway today is representations and warranties insurance isn't just a niche product anymore. It's become a strategic tool that helps buyers and sellers move deals forward with greater confidence.

Amanda Knight 17:56

Thanks for listening to Placing You First. We'll see you next time.