The Big Six reps and warranties — what a buyer demands.

A purchase agreement's representations are the seller's sworn picture of the agency, and the warranties are the promise to make the buyer whole if the picture is wrong. That makes the reps section the buyer's primary post-close recourse — and the place sellers most want to narrow. Knowing which six reps matter, and which deserve the stronger fundamental treatment, is how a buyer ensures the recourse is real rather than cosmetic.

§ 01 · The Big SixThe categories that anchor the deal.

The Big Six are the representation categories that carry an agency deal. Good standing and authority confirms the entity can legally transact. Financial accuracy warrants the books and the absence of undisclosed material changes — and most sub-$5M agencies anchor this rep to "consistent with past practices" rather than GAAP, because forcing GAAP would require a costly restatement of what's typically cash-basis or hybrid bookkeeping. No undisclosed liabilities guards against hidden exposure. Ownership of the book and title to assets warrants the seller actually owns what they're selling. Carrier compliance covers the appointments. And employee matters covers classification, compensation, and employment compliance — including the producer-1099 misclassification risk that state and IRS tests can override regardless of how the agency labeled the worker.

§ 02 · General vs. fundamentalTwo tiers, two clocks.

The two tiers are where the real protection lives. A general rep gives the buyer recourse up to a fraction of the price for a couple of years; a fundamental rep gives recourse up to the entire price for as long as the underlying claim can be brought. The default fundamental reps in agency deals are authority and ownership of the book — the two things that, if wrong, unravel the entire transaction — with tax matters often added. The escalation candidates are where a buyer earns protection deal-specific: carrier compliance should be fundamental for an agency concentrated in its top-three carriers, ownership of equity should be fundamental for a multi-partner agency with prior buyouts, and the misclassification piece of employee matters should be extended to 24–36 months given the standard three-year audit lookback. Pushing the right reps into the fundamental tier is the single highest-value move in the section, and it feeds directly into the recovery mechanics covered in indemnification baskets, caps, and survival.

§ 03 · The disclosure scheduleThe quiet risk-transfer mechanic.

The most underestimated part of the reps section is the disclosure schedule, because it works in the seller's favor by default. Anything specifically listed against a representation shifts that risk from seller to buyer — a disclosed item is, by definition, something the buyer agreed to take on. So a seller's incentive is to disclose broadly and vaguely ("various employment claims, none material"), and the buyer's counter is to demand the opposite: disclosures that are specific, dated, and dollar-quantified, so a catch-all punt can't quietly transfer a large unknown liability. The financial-accuracy rep's past-practices anchor interacts here too — when the rep is calibrated to historical practice rather than GAAP, the buyer's protection is only as good as the disclosure schedule's precision about what that historical practice actually was. Reading the schedule as carefully as the reps themselves is what keeps the warranty from being hollowed out one vague line item at a time.

§ 04 · Companion reps and the consentsNarrowing the catch-alls.

The final craft is in the companion representations that make the big ones enforceable. The "no undisclosed liabilities" catch-all is hard to enforce on its own, so a buyer narrows it by pairing it with a specific no pending or threatened litigation rep and a specific tax compliance rep — narrower reps are easier to enforce because a breach is harder to argue around. Carrier compliance gets two companions: a required-consents schedule, which is the closing-condition counterpart to the rep (the rep covers the current state of the appointments, the condition covers obtaining the consents needed to keep them post-close), and a loss-run and loss-ratio sub-rep, because misrepresented loss ratios are the leading hidden signal of an appointment about to be terminated. Built this way — the right reps made fundamental, the catch-alls narrowed by specific companions, the disclosure schedule held to precision — the representation package gives a buyer recourse that survives contact with a post-close surprise. The drafting craft behind these clauses is in representations and warranties.

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