In a competitive transaction, the difference between a smooth close and a messy surprise often comes down to what you uncover before the ink is dry on the Letter of Intent (LOI). The best buyers don’t just chase the deal – they pressure-test it early, spot the hidden landmines, and use insurance and risk strategy to create leverage, not headaches. In today’s market, winning the deal means being faster, sharper, and more prepared than the other side.
Here are five ways to put yourself in a better position from the start:
1) Analyze insurance and risk issues before signing a letter of intent.
Too many buyers fall in love with the numbers and the story, only to discover weeks before closing that the deal has a few dangerous surprises buried beneath the surface. By then, the leverage is gone, and the clock is ticking.
The smarter move is to bring an experienced insurance and risk diligence provider in early – ideally while the LOI is still being drafted. That gives you a chance to spot issues before they become deal-breakers and to understand what can be fixed, insured, or negotiated. The risks are never one-size-fits-all; they depend on the industry, geography, products, and many other factors. Having the right experts at the table early can save a deal from late-stage collapse.
2) Be proactive in using Reps & Warranties Insurance (RWI).
In a market where buyers are competing fiercely for quality assets, RWI has gone from a nice-to-have to an expectation. Sellers and their advisors increasingly assume it will be part of the structure, especially if they are looking to reduce escrow holdbacks.
That means buyers who wait too long to bring it up may already be behind. Proactively including RWI in the LOI can help you look more prepared, more serious, and more flexible – all of which can matter when the deal gets competitive.
3) Consider covering the full cost of the RWI, including the retention.
Sometimes winning a deal means knowing where to be generous. In many transactions, especially the hot ones, sellers expect the buyer to shoulder the premium and the retention.
That may feel like giving up ground, but in the context of a competitive process, it can be the move that keeps the seller engaged and the transaction moving. RWI is now part of the basic deal toolkit. Being ready to absorb the full cost may be the difference between getting too close and getting left behind.
4) Look for risks that are both insurable and uninsurable.
Some of the most troublesome issues in a deal are the ones that can’t simply be insured away. Tax liabilities, environmental exposures such as PFAS, OSHA compliance issues, and similar risks can create serious post-close pain if not identified early.
The good news is that many of these exposures can be assessed using publicly available information before the LOI is signed or very shortly afterward. Too often, deals go sideways after months of negotiating other aspects of a transaction, leading to higher costs, greater fatigue, and more chances for the transaction to stall. The earlier you identify these risks, the better your odds of keeping momentum.
5) Address the go-forward strategy with the same urgency as standard diligence.
Closing the deal is only half the battle. The real value comes from what happens next: how the business will operate, what the insurance program will look like, how risk will be managed, and how employee benefits will be handled post-close.
Whether you’re acquiring an add-on or building a platform, the go-forward strategy deserves attention from the outset. Bringing in your broker’s insurance, risk management, safety, and benefits teams early allows them to help shape a plan that supports integration and improves ROI. That kind of preparation doesn’t just reduce friction – it gives you more confidence heading into close.
Final thoughts
The strongest buyers don’t wait for surprises to surface – they go looking for them. By identifying risk early, using RWI strategically, and thinking beyond close, you can reduce friction, strengthen your position, and make the deal more likely to land the way you want. In a market where speed and certainty matter, preparation is one of the best ways to win.
If you’re working on a transaction and want to pressure-test the risks before they become problems, schedule a consultation with our M&A team. We can help you identify potential gaps early, build the right risk strategy, and position your deal for a smoother close.
Mike Richmond
Mike is a Senior Vice President at The Horton Group. As a trusted business advisor, he is responsible for analyzing every detail of a client’s business, determining every exposure and providing risk management programs to insulate his clients’ businesses from liability. Mik is also an attorney who studied law at night while working as an insurance consultant. His legal education gives him an intimate understanding of the liabilities businesses face, as well as the many ways those liabilities can affect businesses.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.
