Safeguarding RWI Coverage for Crucial IP Asset

Castle Harbour secured full RWI coverage for the acquisition of a pre-revenue AI company by resolving underwriter concerns over potential university IP claims tied to the company’s core technology.

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Castle Harbour advised a financial sponsor in securing full RWI coverage for the acquisition of a pre-revenue AI company, despite a major red flag in diligence. The underwriter initially proposed excluding coverage for the company’s core AI technology, citing concerns that it may be subject to university IP claims under a research agreement– given that the founders had developed it at a time they were serving as professors at the university.

Drawing on its experience dealing with similar academic IP frameworks and a strong relationships with the underwriter, Castle Harbour was able to analyze the operative provision in the research agreement and advise the buyer and its IP counsel on what additional diligence could be done in order to confirm that no university resources were in fact used by the founders in developing the IP. As a result of these efforts, the exclusion was removed, and the buyer retained full coverage on the company’s most valuable asset.

Policy type: Buyer-side RWI
Size: $500MM - $1B
Sector: Technology

Buyer type: Financial Sponsor
Buyer jurisdiction: U.S.
Seller jurisdiction: U.S.