- Effect on Deal Characteristics: Buy-Side RWI is more prevalent on deals for which the purchase price exceeds $50M, reflecting RWI insurers’ historical preference to focus on deals at or above that size, but increased competition in the RWI space is resulting in smaller deals now qualifying for RWI.
- Effect on Financial Terms: Over 90% of deals with Buy-Side RWI contain a purchase price adjustment mechanism, and 82% of deals with Buy-Side RWI use a separate escrow to secure the purchase price adjustment.
- Effect on Setoffs: While 84% of deals with earnouts that have no Buy-Side RWI allow buyers to offset indemnity claims against future earnouts, only 61% of deals with Buy-Side RWI allow it, and 33% of deals with Buy-Side RWI expressly prohibit such offsets.
- The market capitalization (market cap) of the buyer; and
- The purchase price paid by the buyer in the acquisition (including escrowed amounts, but not including potential earnouts).
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