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Exiting a Small Business – What Owners Fear Most

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exiting a small businessExiting a Small Business – What Owners Fear Most

Hi, I’m Gordon Coyle. When I speak with business owners who are in the process of exiting a small business or selling their companies I repeatedly hear the same fears and concerns over the potential costly litigation arising from the sale of their firms.

Sellers worry about larger buyers whether strategic or well-funded private equity buyers, crushing them with litigation over potential innocent misrepresentations made in the deal.

They also fear leaving ten or fifteen percent of the deal proceeds at the closing table as collateral, funding their indemnity obligations.

They worry that they’ll never realize those dollars in a year or two.

How do you put those fears to rest and have a clean exit?

We’re going to go over that coming right up.

Okay, you’re thinking of selling your business, or you’re an advisor to a decision maker about to exit their firm and this concern over costly litigation is weighing on you.

I get it, you’re selling a company that may have taken most of your career to build and you’re agreeing to indemnify the buyer if they suffer financial damages as a result of your representations and warranties in the sale agreement.

On top of that you’re securing that indemnity obligation with a portion of your deal proceeds – usually 10 to 15 percent for one or two years.

And you worry that the buyer can siphon off that hold back too easily if the company experiences any downturn.

In an ideal world, you’d want to walk away from the closing table with all the proceeds and little risk of litigation.


Well, that’s what M&A insurance can do, specifically Reps & Warranties Insurance or R&W for short.

Until now, there has been no product to hedge the risk of a small business sale with R&W insurance, but fortunately, that has changed.

For deals with an enterprise value of around $15M or less, we can arrange R&W insurance that is affordable, and easy to obtain.

Unlike mid-market deals purchasing Reps & Warranties Insurance, our program:

Does not require an underwriting fee.

Does not require an underwriting call.

Can be priced in about 2 days with fewer than 10 questions.

That price is what’s known as a non-binding premium indication.

Meaning that if the resulting price is interesting and the seller wants to move forward a more detailed application is completed with supplemental docs submitted to underwriting.

Pricing is very competitive.

What does R&W insurance do for a seller who’s exiting a small business?

The first thing is that it often eliminates the need for escrow as the insurance steps into the shoes of a security interest.

It also provides a defense if you are sued by the buyer, and ultimately pays the settlement if the buyer is successful in court.

After your retention or deductible is paid, of course.

The BIG thing R&W insurance does for a seller walking away from the closing table is give them peace of mind, security, and the full deal proceeds in their bank account.

Want to learn more?

Let’s chat and I can tell you more about it. No pressure, no sales tactics, no gimmicks.

Just a conversation.

I promise when we connect that I’m not going to give you any sort of a high-pressure sales job.

If you’re just curious if this type of insurance is right for you or your deal, that’s okay.


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