Founders negotiate the headline price for months. The terms that decide how much of it they keep get set in about week three of the documents, and none of them appears in the LOI. Indemnification is where I see founders most consistently lose money.
The four levers
Your reps and your price are linked through a stack of caps, baskets, survival periods and carve-outs, and each lever moves real money. The figures below are 2025 SRS Acquiom data, so you know what your peers actually negotiated.
The cap: The most the buyer can recover for breaches of general reps. The 2025 median on deals without R&W insurance was 10% of transaction value; on R&W deals it dropped to 0.5%, which is just the retention. Fundamental reps and fraud usually stay uncapped or are capped at the purchase price.
The basket: The threshold losses must cross before any claim is recoverable. 61% of 2025 baskets came in at 0.5% of transaction value or less.
Survival: The window for bringing claims. Where general reps survived, 71% of 2025 deals set it at 12 months. 32% of deals had no general-rep survival at all, rising to 57% on R&W deals. Fundamental reps run longer, tax runs to the statute of limitations and fraud is indefinite.
Sandbagging: Can the buyer recover for a breach it knew about during diligence? In 2025, 49% of deals were expressly pro-sandbagging, 50% were silent and fewer than 1% were expressly anti-sandbagging. Silence is risky, because Delaware’s default leans pro-sandbagging and California’s leans the other way. Resolve it in writing.
The headline cap means little without the basket, the survival period and the sandbagging treatment. Together they define your real economic exposure after closing, so negotiate them as a package, not one at a time.
How R&W insurance rewrote the indemnity
R&W insurance was identified on roughly 46% of 2025 deals, and the true number is higher because buyers don’t always disclose buy-side policies. Founders who don’t understand how it works end up negotiating against an architecture that predates it.
How it works: The buyer typically buys a policy covering losses from breaches of the seller’s reps. The seller’s indemnity shrinks to a small retention, and the insurer becomes the recovery path. Sellers like it because their post-closing exposure drops to almost nothing; buyers like it because an insurer is a better-credit counterparty than escrowed seller proceeds.
The economics: Premiums typically run 2.5% to 4% of the policy limit, paid once. The retention is 0.5% to 1% of enterprise value at signing, dropping to 0.5% after 12 months, and policy limits are typically 10% of enterprise value. Brokers and underwriters are a separate workstream, engaged at the LOI and bound at signing.
The effect: In 2025, R&W deals had a median cap of 0.5% of transaction value, against 10% without insurance, and a median aggregate escrow of 2.8%, against 11.1%. The seller’s package collapses to fundamental reps, fraud and typically half of the retention for the first year.
What the policy won’t cover
Known issues identified in diligence are excluded, including known tax issues. So are transfer taxes, breaches of covenants, purchase price adjustments and specific exposures surfaced in diligence. Each of these has to be negotiated separately, usually as a special indemnity.
The takeaway
In any deal above roughly $30 million of enterprise value, assume R&W insurance is on the table. Negotiate the indemnity package as if the policy will be in the deal, and negotiate the premium and retention split as line items in the consideration, because functionally they are.
Ahmed Hasan is the founder and CEO of Venture Bridge Law, a corporate and M&A boutique. This article is general information, not legal advice.