M&A Reps and Warranties

Reps and Warranties: Common Issues and Resolutions

Reps and Warranties All Purchase and Sale agreements (“PSAs”) have sections called buyer and seller reps and warranties.  The intent of these sections is to disclose and describe any known issues in the business and to address how they will be dealt with.  It is generally accepted that any issues that come up post-sale, but…

Merger Definition

Mergers and Acquisitions Definitions: the Full List

Mergers and Acquisitions Definitions Here we list Mergers and Acquisitions definitions alphabetically and try to add a little color about their significance. CAGR: Cumulative Average Growth Rate.  For example, revenues growing 30% in the first year, then 10 % in the second year and 5% in the third year has a three year revenue CAGR…

LOI

Why is the Letter of Intent (LOI) so Important?

Why is the Letter of Intent so important? Because, in the context of a business sale, it marks the critical point where power shifts from the seller to the buyer. What I mean by this is that an LOI typically includes a term requiring exclusivity.  Exclusivity means the seller has to stop engaging with other…

Purchase and Sale Agreement

The Purchase and Sale Agreement Explained

The Purchase and Sale Agreement (PSA or SPA in the case of a Share Purchase Agreement) is one document in a set of final documents that completes a company sale transaction.  Other documents typically include employment agreements, escrow agreements, non-competition agreements, releases, schedules and more depending on the type of transaction being contemplated. Importance of…

business due diligence

What is Due Diligence and What Does it Entail?

What is the Due Diligence? Due diligence is an investigation of a business or person prior to signing a contract.  More specific to a business sale, business due diligence is the process of verifying the representations made in the CIM and other marketing materials provided to the potential acquirer by the seller.  For example, in…

Mergers and Acquisitions

M&A Acronyms, Abbreviations and Definitions

Merger and Acquisition Acronyms, Abbreviations and Definitions. Whether a transaction is defined as a merger or an acquisition is determined by a number of accounting tests.  Simply put, both parties in a merger need to meet a number of equality tests and, when met, transactions classified this way can be more tax efficient.  Because of…

NDA-non-disclosure-agreement

NDA Agreement: Meaning and Sample Clauses

Non Disclosure Agreements A Non Disclosure Agreement (NDA, also called CA for Confidentiality Agreement and MNDA for Mutual Non Disclosure Agreement) are contracts that stipulate that information received from a counter-party will only be used for the purpose as defined in the NDA.  Meaning, it will not be used as a basis for competitive tactics…