Document type: Toolkit Practice area: Business and Corporate — Mergers and Acquisitions Jurisdiction: United States (Delaware emphasis) Last reviewed: 5 September 2026

1. LOI indemnity terms

Put these in the letter of intent. Leverage is highest before exclusivity.

INDEMNIFICATION AND RISK ALLOCATION

Insurance. Buyer shall obtain a buy-side representation and
warranty insurance policy with a limit of not less than [10]% of
enterprise value. [Buyer shall pay the premium and underwriting
fee. The retention shall be funded [equally by the parties /
by Buyer].]

Escrow. An escrow of [1.0]% of the purchase price shall be the
[sole and exclusive] source of recovery for breaches of
representations other than Fundamental Representations, and
shall be released [12] months after Closing, less amounts
subject to pending claims.

Survival. Representations shall survive [18] months, except
Fundamental Representations and Tax Representations, which shall
survive until [60] days after the expiration of the applicable
statute of limitations.

Basket and Cap. A deductible basket of [0.5]% of the purchase
price shall apply, with a per-claim de minimis of $[__]. The cap
for representations other than Fundamental Representations shall
be the Escrow. The cap for Fundamental Representations shall be
the purchase price actually received by each Seller, severally
and not jointly.

Exclusive Remedy. Indemnification shall be the sole and
exclusive remedy of the parties, other than for Fraud (as
defined in the definitive agreement) and for specific
performance.

Specific Matters. Matters identified in diligence and mutually
agreed to warrant separate treatment shall be addressed through
specific indemnities outside the foregoing limitations.

Adjustment. The purchase price adjustment shall be separate from
indemnification, and no matter shall be recovered twice.

Drafting notes.

"Sole and exclusive source of recovery" is the seller's most valuable phrase, and it is distinct from a cap. A cap of 10 percent with recourse beyond the escrow leaves the sellers personally exposed for the difference. Buyers should concede it only where insurance covers the gap; sellers should ask for it in the LOI, when they can still walk.

The "Specific Matters" paragraph is the buyer's protection against having conceded a thin package before diligence.

In an auction, treat markups of the indemnity article as part of the bid. A $100 million bid with a 12 percent two-year escrow is worth less than a $97 million bid with a 1 percent insured structure — and sellers routinely fail to compute the difference.

2. Definitions that do the work

"Knowledge" means, with respect to the Company, the actual
knowledge of [Name] (CEO), [Name] (CFO), [Name] (General
Counsel), and [Name] ([title]), in each case after reasonable
inquiry of those employees reporting directly to such person who
would reasonably be expected to have knowledge of the matter in
question.

"Fraud" means an actual and intentional misrepresentation of a
fact expressly set forth in Article [III] of this Agreement,
made by the Company or Seller with actual knowledge that such
representation was false when made, with the intent to induce
Buyer to enter into this Agreement, and upon which Buyer
actually and justifiably relied to its detriment and suffered
damages. "Fraud" does not include constructive fraud, equitable
fraud, promissory fraud, unfair dealings fraud, negligent or
reckless misrepresentation, or any claim based on any statement
or omission not expressly set forth in Article [III].

"Losses" means losses, damages, liabilities, costs, and expenses
(including reasonable attorneys' fees), but excluding punitive
or exemplary damages except to the extent actually awarded to
and paid to a third party. For the avoidance of doubt, Losses
[shall / shall not] include damages measured by a multiple of
earnings or other valuation metric.

"Material Adverse Effect" means any change, event, occurrence,
or effect that, individually or in the aggregate, has had or
would reasonably be expected to have a material adverse effect
on the business, assets, results of operations, or financial
condition of the Company, taken as a whole; provided that no
change arising from the following shall be taken into account:
(a) general economic, financial, credit, or capital market
conditions; (b) conditions generally affecting the industries in
which the Company operates; (c) changes in law, GAAP, or
accounting or regulatory requirements; (d) acts of war,
terrorism, civil unrest, epidemic, pandemic, or natural
disaster; (e) the announcement or pendency of the transactions
contemplated hereby, including any loss of employees, customers,
or suppliers resulting therefrom; (f) any failure by the Company
to meet any internal or published projections, forecasts, or
estimates (provided that the underlying cause of such failure
may be taken into account unless otherwise excluded); and (g)
any action taken at the written request of Buyer; provided
further that changes described in clauses (a) through (d) shall
be taken into account to the extent they have a
disproportionate effect on the Company relative to other
participants in the industries in which it operates.

Drafting notes.

The Knowledge definition's named list is a real economic term. Four names is seller-favorable; fifteen is buyer-favorable. "After reasonable inquiry" is the buyer's minimum ask and sellers should generally concede it — a knowledge representation from people who did not ask anyone is worth very little and it looks bad.

The Fraud definition is the most important sentence in the agreement. Undefined, the carve-out swallows every cap, basket, and survival period, because a plaintiff will plead equitable fraud or negligent misrepresentation. The exclusion list is what closes that door. Pair it with the anti-reliance provision below.

The Losses definition's multiple-based damages sentence should be answered rather than left open. The difference between a $2 million repair cost and eight times a $2 million earnings shortfall is usually the entire claim.

MAE clause (f)'s parenthetical — preserving the underlying cause — is standard and important. Without it, a buyer cannot invoke an MAE arising from any cause that also produced a projection miss.

And be realistic about the MAE. In re IBP, Inc. Shareholders Litigation, 789 A.2d 14 (Del. Ch. 2001) and Hexion Specialty Chemicals, Inc. v. Huntsman Corp., 965 A.2d 715 (Del. Ch. 2008) set a burden buyers essentially never meet. A buyer that needs to walk for a specific risk should negotiate a specific, quantified closing condition instead.

3. The anti-reliance provision

NO OTHER REPRESENTATIONS; NON-RELIANCE

Buyer acknowledges and agrees that:

(a) neither the Company, Seller, nor any of their respective
    Affiliates, officers, directors, employees, agents, or
    advisors has made, and Buyer has not relied upon, any
    representation or warranty, express or implied, at law or in
    equity, with respect to the Company, its business, assets,
    liabilities, or prospects, or with respect to the accuracy
    or completeness of any information made available to Buyer,
    EXCEPT for the representations and warranties expressly set
    forth in Article [III] (as qualified by the Disclosure
    Schedules);

(b) without limiting the foregoing, Buyer has not relied upon,
    and no Person shall have any liability with respect to, any
    projection, forecast, estimate, budget, business plan, or
    other forward-looking information, or any information
    contained in any management presentation, confidential
    information memorandum, data room, or diligence response,
    except to the extent expressly covered by a representation
    in Article [III]; and

(c) Buyer has conducted its own independent investigation of the
    Company and is entering into this Agreement in reliance on
    that investigation and on the representations expressly set
    forth in Article [III].

Nothing in this Section shall limit any claim for Fraud.

Drafting notes.

This provision is enforceable as to extra-contractual statements, and it is one of the most valuable things a seller obtains. ABRY Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032 (Del. Ch. 2006) held that a buyer may effectively disclaim reliance on statements outside the agreement, while also holding that a seller may not immunize itself from a claim that it knowingly made a false representation in the agreement.

Subsection (b) is what actually stops the data-room fraud claim. Without it, every optimistic projection in a management presentation is a potential extra-contractual misrepresentation.

The final sentence is the buyer's price for the rest, and it must be there. An anti-reliance provision that purported to bar fraud claims entirely would not be enforced and would taint the provision.

Buyer-side counterpoint: if you accept this, make sure the representations in Article III actually cover what you are relying on. This provision converts diligence findings into representations or into nothing.

4. Indemnification article — annotated skeleton

ARTICLE [VIII] — INDEMNIFICATION

8.1  SURVIVAL.
     (a) Representations in Sections [__] (the "Fundamental
         Representations") survive until [60] days after the
         expiration of the applicable statute of limitations.
     (b) Representations in Section [__] (Taxes) survive until
         [60] days after expiration of the applicable statute of
         limitations.
     (c) All other representations survive for [18] months after
         the Closing Date.
     (d) Pre-Closing covenants survive [18] months; post-Closing
         covenants survive in accordance with their terms.
     (e) Notwithstanding the foregoing, any claim for which a
         Claim Notice is delivered before the applicable
         expiration shall survive until finally resolved,
         provided that if such claim is not resolved within
         [twelve (12)] months of the Claim Notice, the claiming
         party shall commence an action within [thirty (30)]
         days thereafter or the claim shall be deemed waived.
     (f) Claims for Fraud survive indefinitely.

8.2  INDEMNIFICATION BY SELLER.
     Subject to this Article, Seller shall indemnify Buyer
     Indemnitees against Losses arising from (a) any breach of a
     representation; (b) any breach of a covenant; (c) the
     Specific Matters set forth on Schedule 8.2(c); and (d) any
     Excluded Liability [asset deals].

8.3  INDEMNIFICATION BY BUYER. [Mirror.]

8.4  LIMITATIONS.
     (a) De minimis. No claim unless Losses from such claim
         (and related claims) exceed $[__].
     (b) Basket. No indemnification until aggregate Losses
         exceed $[__], AND THEN ONLY FOR THE EXCESS.
     (c) Cap. Aggregate liability for breaches of
         representations other than Fundamental Representations
         shall not exceed the Escrow Amount, AND THE ESCROW
         SHALL BE THE SOLE AND EXCLUSIVE SOURCE OF RECOVERY
         THEREFOR.
     (d) Fundamental cap. Aggregate liability for Fundamental
         Representations shall not exceed, as to each Seller,
         the portion of the Purchase Price actually received by
         such Seller.
     (e) Several liability. The obligations of the Sellers are
         several and not joint, in proportion to their
         respective Pro Rata Shares.
     (f) Exclusions. Sections 8.4(a) through (d) do not apply to
         Fraud, to the Specific Matters, or to [__].

8.5  MATERIALITY SCRAPE.
     For purposes of determining the amount of Losses (but not
     for determining whether a breach has occurred), each
     representation shall be read without regard to any
     qualification as to materiality or Material Adverse Effect,
     other than in Sections [__] (where such qualification is
     definitional).

8.6  MITIGATION; COLLATERAL SOURCES; NO DOUBLE RECOVERY.
     (a) Each Indemnified Party shall use commercially
         reasonable efforts to mitigate Losses.
     (b) Losses shall be net of insurance proceeds and third-
         party recoveries actually received, net of collection
         costs, deductibles, and any resulting premium increase.
     (c) Losses shall be net of Tax benefits actually realized
         in the year of the Loss or the following year.
     (d) No Indemnified Party may recover more than once for the
         same Loss, whether under this Article, the Purchase
         Price adjustment, or the R&W Policy.

8.7  THIRD-PARTY CLAIMS. [See Section 6 below.]

8.8  CLAIM PROCEDURE. [See Section 7 below.]

8.9  EXCLUSIVE REMEDY.
     From and after Closing, this Article provides the sole and
     exclusive remedy for any claim arising out of this
     Agreement, EXCEPT for (a) Fraud; (b) claims for specific
     performance or injunctive relief; (c) the Purchase Price
     adjustment under Section [2.__]; and (d) claims under [the
     Non-Competition Agreement / the Transition Services
     Agreement].

8.10 R&W POLICY.
     Buyer has obtained the R&W Policy. Buyer shall not amend
     the subrogation waiver in favor of Sellers except as to
     Fraud. Recovery under the R&W Policy is not a condition to
     any claim under this Article, but Losses recovered
     thereunder shall reduce Losses recoverable hereunder.

8.11 TREATMENT. Indemnity payments shall be treated as
     adjustments to the Purchase Price for Tax purposes.

Drafting notes.

8.1(e) is the trap most often drafted badly. A survival provision that requires suit within the survival period punishes a buyer negotiating in good faith on the last day. The formulation above — notice within the period, suit within twelve months plus thirty days — is workable for both sides.

8.4(b)'s capitalized "AND THEN ONLY FOR THE EXCESS" is the deductible basket. Delete those words and you have a tipping basket. It is the single most commonly mis-drafted phrase in the article.

8.4(c)'s "SOLE AND EXCLUSIVE SOURCE OF RECOVERY" is what makes the escrow a true ceiling rather than a funding mechanism.

8.4(e) matters enormously to minority sellers. A founder with 4 percent should not be jointly liable for 100 percent of a claim.

8.5's carve-out for definitional materiality prevents the scrape from converting "material contracts" into "all contracts."

8.6(c)'s "actually realized" avoids arguments about hypothetical tax positions.

8.10 is essential where there is insurance and is frequently omitted. The subrogation waiver is the seller's protection; the reduction rule prevents double recovery.

5. Special indemnity template

SCHEDULE 8.2(c) — SPECIFIC MATTERS

Matter 1: Independent Contractor Classification

Description: Any Loss arising from the classification of the
owner-operator drivers identified on Schedule 3.16(d) as
independent contractors rather than employees for any period
prior to the Closing, including any assessment, penalty,
interest, back wages, benefits, or Tax (including employment
Tax) imposed by any Governmental Authority or awarded in any
private action, and any reasonable costs of defense.

Indemnity: Seller shall indemnify Buyer Indemnitees for such
Losses, dollar-one, without regard to the De Minimis, the
Basket, or the Cap.

Cap: $[4,000,000].
Survival: [48] months after Closing.
Escrow: A separate escrow tranche of $[2,000,000] shall be
established and released, less pending claims, on the [48]-month
anniversary.
Defense: Seller shall control the defense of any Governmental
Authority audit or proceeding, at its expense, with counsel
reasonably acceptable to Buyer; Buyer may participate at its
expense; Seller shall not settle any such matter without
Buyer's consent (not to be unreasonably withheld) if the
settlement includes non-monetary relief, an admission, or would
be binding on Buyer for post-Closing periods.
Buyer Covenant: If Buyer reclassifies any such driver as an
employee following the Closing, this indemnity shall not apply
to any Loss attributable to periods following such
reclassification to the extent the Loss arises from the
reclassification itself.

Drafting notes.

The Buyer Covenant at the end is the seller's most important term in an indemnity of this type, and it is often forgotten. Without it, the buyer can create the very liability it is being indemnified against.

Precision in the Description matters: reference the specific schedule item or diligence document, so there is no argument later about what was covered.

Defense control follows the interest. Where the matter is primarily a pre-closing exposure, the seller should defend. Where it affects post-closing operations or a customer relationship, the buyer should.

Known matters are excluded from RWI policies, which is exactly why these exist.

6. Third-party claim procedure

8.7 THIRD-PARTY CLAIMS.

(a) Notice. An Indemnified Party shall notify the Indemnifying
    Party within [20] days of receiving notice of a Third-Party
    Claim, describing it in reasonable detail and attaching the
    relevant papers. Failure to give timely notice relieves the
    Indemnifying Party only to the extent it is actually
    prejudiced.

(b) Assumption. Within [20] days of receipt, the Indemnifying
    Party may assume the defense with counsel reasonably
    acceptable to the Indemnified Party, provided it first
    acknowledges in writing that the claim is indemnifiable
    hereunder without reservation.

(c) Exceptions. The Indemnifying Party may not assume the
    defense if the claim (i) seeks injunctive or other non-
    monetary relief; (ii) is brought by a Governmental
    Authority or alleges criminal conduct; (iii) is brought by
    a customer, supplier, or employee of the Business with whom
    Buyer has a continuing relationship; (iv) reasonably could
    result in Losses exceeding the Cap; or (v) involves a Tax
    matter that could affect post-Closing periods.

(d) Cooperation. The parties shall cooperate, and the
    Indemnified Party shall provide reasonable access to
    records and personnel.

(e) Settlement. The Indemnifying Party shall not settle without
    the Indemnified Party's consent unless the settlement (i)
    includes a full release, (ii) involves only money paid in
    full by the Indemnifying Party, (iii) includes no admission
    of wrongdoing, and (iv) imposes no continuing obligation.
    The Indemnified Party shall not settle any claim for which
    it seeks indemnification without the Indemnifying Party's
    consent, not to be unreasonably withheld.

(f) Participation. The non-controlling party may participate
    with its own counsel at its own expense.

Drafting notes.

Subsection (c)(iii) is the buyer's most important carve-out. A seller controlling the defense of a claim by a customer the buyer needs has interests directly opposed to the buyer's.

Subsection (b)'s "without reservation" acknowledgment prevents the seller from defending under a reservation of rights and then disputing indemnifiability after the loss is fixed.

7. Claim notice

[Date]
[Indemnifying Party / Sellers' Representative]
[Address per Section 10.__]

Re: Claim Notice under Section 8.8 of the [Purchase Agreement]
    dated [date]

This is a Claim Notice under Section 8.8.

1. REPRESENTATION BREACHED
   Section 3.__ (___________), which provides: "[quote]".

2. FACTS
   [Specific facts, with dates. Attach documents.]
   On [date], Buyer discovered that [__]. [Explain how the facts
   make the representation untrue as of the Closing Date.]

3. DISCLOSURE SCHEDULES
   Schedule 3.__ discloses [__]. The matter described above was
   not disclosed on Schedule 3.__ or on any other Schedule.

4. LOSSES
   Buyer has incurred, or reasonably expects to incur, Losses of
   $[__], calculated as follows:
       [Line-item calculation.]
   Buyer reserves the right to supplement as additional Losses
   are incurred.

5. BASKET AND CAP
   Aggregate Losses to date, including this claim, are $[__],
   which [exceeds / does not yet exceed] the Basket of $[__].
   This claim [is / is not] subject to the Cap.

6. ESCROW
   Buyer requests that the Escrow Agent hold back $[__] pending
   resolution, in accordance with Section [__] of the Escrow
   Agreement, and is delivering a copy of this notice to the
   Escrow Agent.

7. R&W POLICY
   Buyer has provided notice to the insurer under the R&W Policy
   [on [date] / concurrently herewith].

Enclosures: Exhibits A through [__].

Drafting notes.

Sections 1 through 4 are the notice. Courts have dismissed claims where the notice failed to identify the representation or gave no basis for the amount, and amendments after the survival period may not relate back.

Section 3 is underused. Affirmatively addressing the disclosure schedules forecloses the seller's most common first response.

Section 6's copy to the escrow agent is what actually holds back the money; a notice to the seller alone may not.

Section 7's parallel notice to the insurer is mandatory in practice. RWI policies have their own notice provisions, often shorter and stricter than the agreement's, and late notice is a coverage defense.

8. Earnout covenants that are enforceable

EARNOUT COVENANTS

During the Earnout Period, Buyer shall, and shall cause the
Company to:

(a) operate the [Specialty Enzymes Business] as a separate
    business unit with a separate chart of accounts, and shall
    not reallocate any Earnout Product (identified by product
    code on Schedule [__]) or any Earnout Customer (listed on
    Schedule [__]) to any other business unit;

(b) maintain a dedicated sales organization for the Earnout
    Products of not fewer than [14] full-time equivalents and
    an annual sales and marketing spend of not less than
    $[2,400,000];

(c) maintain in effect the distributor agreements listed on
    Schedule [__], and not terminate, amend adversely, or fail
    to renew any such agreement without Seller's consent (not
    to be unreasonably withheld);

(d) not reduce the list price of any Earnout Product below
    [95]% of its price as of the Closing Date without Seller's
    consent;

(e) fund research and development for the Earnout Products at
    not less than $[__] per year;

(f) not change any accounting policy, practice, or estimate in a
    manner that would reduce Earnout Revenue; and

(g) deliver to Seller, within [30] days after each fiscal
    quarter, a statement of Earnout Revenue with SKU-level
    detail, and afford Seller and its accountants reasonable
    access to the books and records supporting it.

ACCELERATION. If Buyer (i) sells the Earnout Business or all or
substantially all of its assets, (ii) undergoes a change of
control, or (iii) breaches any covenant in this Section in a
manner that Seller demonstrates has reduced Earnout Revenue,
then the full Earnout Amount shall become immediately due and
payable.

DISPUTES. Disputes concerning the calculation of Earnout Revenue
shall be resolved by [firm], acting as an expert and not as an
arbitrator, deciding only the disputed items and only within the
range of the parties' respective positions, with fees allocated
in proportion to the amounts decided in each party's favor.

NO SET-OFF. Buyer shall not set off any indemnification claim
against the Earnout Amount [except for claims finally determined
and only up to $[__]].

Drafting notes.

Specific numbers are what make these enforceable. "Buyer shall use commercially reasonable efforts to maximize Earnout Revenue" is unenforceable in practice, and the implied covenant of good faith and fair dealing will not rescue it — it fills gaps the parties did not address, not bargains they made badly.

Subsection (a)'s separate chart of accounts is the operational requirement that makes measurement possible. Without it, the metric becomes an allocation argument.

Acceleration on a change of control is the seller's protection against being sold into a buyer with no earnout obligation and no incentive.

Revenue over EBITDA over anything computed. Each layer of computation is a place to argue.

9. Working capital exhibit format

EXHIBIT [__] — SAMPLE CALCULATION OF NET WORKING CAPITAL
As of [date], prepared in accordance with the Accounting
Principles

CURRENT ASSETS INCLUDED
  Accounts receivable, net of allowance          $__________
    [Allowance methodology: __]
  Inventory, net of reserves                     $__________
    [Reserve methodology: __; costing: __]
  Prepaid expenses                               $__________
  Other current assets (Schedule A)              $__________
  TOTAL INCLUDED CURRENT ASSETS                  $__________

CURRENT ASSETS EXCLUDED
  Cash and cash equivalents
  Income tax receivables
  Deferred tax assets
  [Other]

CURRENT LIABILITIES INCLUDED
  Accounts payable                               $__________
  Accrued compensation and benefits              $__________
  Accrued expenses (Schedule B)                  $__________
  Deferred revenue                               $__________
    [Basis: __]
  TOTAL INCLUDED CURRENT LIABILITIES             $__________

CURRENT LIABILITIES EXCLUDED
  Indebtedness (as defined)
  Transaction Expenses (as defined)
  Income taxes payable
  Deferred tax liabilities
  [Other]

NET WORKING CAPITAL                              $__________
TARGET NET WORKING CAPITAL                       $__________
EXCESS / (SHORTFALL)                             $__________

ACCOUNTING PRINCIPLES. The Net Working Capital shall be
calculated in accordance with, in descending order of priority:
(i) the specific methodologies, policies, and classifications
set forth in this Exhibit and in Schedules A and B; (ii) the
accounting principles, practices, methodologies, and policies
actually used by the Company in preparing the Audited Financial
Statements, applied on a consistent basis; and (iii) GAAP.

Drafting notes.

Attach a real sample computed on real historical data. This single exhibit prevents more disputes than any provision in the agreement.

The three-level hierarchy is essential. Without it, one side argues GAAP and the other argues historical practice, and both are right.

Name the excluded items explicitly. Cash, debt, transaction expenses, and income taxes are the usual exclusions, and ambiguity about any of them is a seven-figure argument in a mid-market deal.

Deferred revenue is the recurring fight in software and services deals. State the basis, and consider whether the target should be adjusted for it.

10. Post-closing calendar

Issue this at closing to both sides, with a named owner on each.

POST-CLOSING OBLIGATIONS CALENDAR — [Deal name]
Buyer owner: __________  Seller owner: __________

DATE        ITEM                                  OWNER  DONE
_______ Estimated closing statement delivered      B    [ ]
_______ Final closing statement due (Closing +90)  B    [ ]
_______ Seller objection deadline (+45)            S    [ ]
_______ Resolution period ends                     Both [ ]
_______ Expert determination, if needed            Both [ ]
_______ Adjustment payment due                     ---  [ ]

_______ REVIEW: 45 days before survival expiry     B    [ ]
_______ Operational rep survival expires (+18 mo)  ---  [ ]
_______ Escrow release date (+12 mo)               Both [ ]
_______   Claim notice deadline for holdback       B    [ ]
_______ Special Indemnity 1 survival (+48 mo)      ---  [ ]
_______ Special Indemnity 1 escrow release         Both [ ]
_______ Special Indemnity 2 survival (+36 mo)      ---  [ ]
_______ Tax rep survival (SOL + 60 days)           ---  [ ]
_______ Fundamental rep survival                   ---  [ ]

_______ R&W Policy — operational coverage ends     B    [ ]
_______ R&W Policy — fundamental coverage ends     B    [ ]
_______ R&W Policy notice provisions: [summary]    B    [ ]

_______ Earnout measurement period ends            ---  [ ]
_______ Earnout statement due                      B    [ ]
_______ Earnout objection deadline                 S    [ ]
_______ Earnout payment due                        B    [ ]
_______ Quarterly earnout reports (list dates)     B    [ ]

_______ Transition services term ends              Both [ ]
_______ Non-compete term ends                      ---  [ ]
_______ D&O tail policy expires                    B    [ ]
_______ Tax return cooperation obligations         Both [ ]
_______ Records retention obligation ends          B    [ ]

Drafting notes.

The 45-day review before each survival expiry is the most valuable line. Claims are lost to calendars far more often than to merits.

Name owners. Everyone who worked on the deal will move on; the calendar has to survive them.

11. Quick reference — market terms

Term Traditional Insured
Escrow 5%–15% 0.5%–1%
Survival (operational) 12–24 months 12–18 months contractual; 3 years policy
Basket 0.5%–1%, deductible 0.5%–1%, deductible
De minimis 0.05%–0.1% 0.05%–0.1%
Cap (operational) 10%–15% The retention
Cap (fundamental) 100% of price 100% of price
Scrape Damages-only Damages-only
Exclusive recourse Negotiated Usually yes
RWI premium — 2.5%–4% of limit
RWI retention — 0.5%–1% of EV, halving at 12 months

Related documents

This toolkit is general information, not legal advice, and does not create an attorney-client relationship. Templates require adaptation by counsel to the transaction, the governing law, and the diligence record.