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Specific indemnity

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Quick Answer

A specific indemnity covers one identified problem, usually from dollar one and often uncapped, outside the general indemnification package.1

What it is

It is the destination of a diligence finding that is known, quantifiable, and unacceptable to leave inside the general basket and cap — an unresolved tax exposure, a worker classification issue, a chain-of-title gap. Because representation and warranty insurance generally excludes known matters, the specific indemnity is where an insured deal's real residual risk sits.1

Operational context

What good looks like

Why It Matters

This is the exact point at which the diligence workstream hands off to the drafting one. A finding is not resolved when it is written into an issues log; it is resolved when it becomes a clause, a price change, or an accepted risk.1

Related Questions

What is a specific indemnity and when does a diligence finding become one?

A specific indemnity is a dollar-one, usually uncapped promise covering one identified problem, sitting outside the general indemnity's basket and cap.

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Frequently Asked Questions

What is Specific indemnity in venture capital?

It is the destination of a diligence finding that is known, quantifiable, and unacceptable to leave inside the general basket and cap — an unresolved tax exposure, a worker classification issue, a chain-of-title gap.

Why is Specific indemnity important for startups?

Understanding Specific indemnity is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.

Sources & References

  1. 1.T3-03 — Wagner HicksThe New Normal in Private M&A: Key Takeaways from the 2025 ABA Deal Points StudyWagner Hicks(A specific indemnity covers one identified problem, usually from dollar one and often uncapped, outside the general indemnification package.)secondary · T3 · deal-documents · document

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