reps and warranties for add-ons.

how often do add-ons use reps and warranties insurance?

Less often than platform deals. Ropes & Gray reports that 43% of the $25 million to $100 million add-on acquisitions it handled from 2022 to 2024 used reps and warranties insurance, while add-ons over $100 million used it at rates similar to sponsor platform deals. Ropes & Gray, PErspectives, May 2025.

Goodwin notes that smaller add-ons tend to run a streamlined process, with sellers giving traditional indemnities. Goodwin, May 2024. For most lower-middle-market add-ons, whether to buy a policy is a real question, not a default.

Those are the firms' samples, not a prediction for your add-on. The same Ropes & Gray paper is summarized on reps and warranties insurance by deal size.

what are the four ways to protect an add-on?

For a smaller add-on, we'll check which markets will write it at that size. That check is not a promise that a policy is available.

does the platform's policy cover the add-on?

Not automatically. The platform policy insures the representations in the platform purchase agreement. An add-on has its own purchase agreement, its own seller, and its own representations. Check any agreed portfolio terms or endorsement before assuming the new deal is included.

Some insurers will extend an existing relationship so each new entity has its own limit, subject to their approval. That is the idea behind a portfolio policy. Treat it as a structure you negotiate, not a feature you already have.

what does seller-side transaction liability cost, and how fast can it bind?

One published seller-side product describes a premium that usually falls between 1% and 2% rate on line, depending mainly on sector, jurisdiction, and the share of enterprise value insured. The same note says cover can be bound in as little as 24 hours, because it underwrites the seller's knowledge rather than the buyer's diligence, and that the product is described for deals with enterprise value between $250,000 and $15 million. Transaction liability product FAQ, March 2022.

Your deal's terms depend on underwriting and the form. Other markets set their own size ranges. For a sub-$15 million add-on, we'll check which markets will write it at that size.

when is a portfolio program worth the conversation?

• You expect several add-ons of similar size and sector over the next 12 to 24 months.
• The same deal team and counsel will run them, so diligence looks consistent.
• You are comfortable with whatever commitment the insurer asks for in return.

Ask for the program terms in writing: what is pre-agreed, what each new deal still needs, how limits work per entity, and what you owe if a deal dies. The operating-program version of the same question is add-on insurance integration and insurance for acquisitive companies.

what should you settle before the add-on purchase agreement is signed?

1. Decide the protection route (buy-side policy, seller-side transaction liability, a program, or indemnity) before the indemnity section is drafted, not after.
2. If it is seller-side transaction liability, write the buyer's rights to the proceeds into the purchase agreement.
3. Check the platform's operating policies for acquisition clauses, size thresholds, and notice deadlines. The add-on acquisition checklist walks through this.
4. Get five years of the target's loss runs and its full policy set. A reps and warranties policy does not cover issues diligence already found.
5. Line up the add-on's claims-made tails (directors and officers, errors and omissions, cyber) and decide who pays.
6. Put the first renewal date of the combined program on the calendar now.

These are general explanations, not coverage advice. Coverage depends on underwriting and the policy wording. Riza is a licensed insurance agency.