Seller’s representations and warranties in M&A: Three things to avoid
In an agreement for sale and purchase of business or shares of a company, a seller typically represents and warrants that the business or the company is of certain calibre. A breach of the seller’s representations and warranties amounts to a breach of contract which may entitle the purchaser to …
M&A buyer’s perspective: Should director and shareholder of seller be a party to the SPA?
In a sale and purchase of shares or business, where the seller is a corporation, it is worth considering whether to include the person who has control over the corporate seller (“Person”) as a party to the sale and purchase agreement (“SPA”). The Person would typically be a director and/or …
M&A: What representations and warranties to get from seller?
In an agreement for sale and purchase of business or shares of a company (“SPA”), it is typical for the seller to represent and warrant to the purchaser that the target business or target company is of certain calibre. Typically, there would be fundamental representations and warranties in the SPA …
Related party transaction within an M&A deal
When a buyer enters into an agreement with a seller to acquire shares of a company from the seller (“Transaction”), the buyer and the seller may negotiate for some other deals involving the target company to be included in the sale and purchase agreement in respect of the Transaction. For …
M&A: Why shouldn’t the agreement for retention of key personnel be deferred to post completion?
The Pitfalls of Deferring the Agreement It all started well in the first case. Both the seller and the purchaser of the subject company in the first case agreed that the sale and purchase of the company would be on friendly terms and that the transaction should be completed as …
Disposal of business: What to take note
Business owners or sellers who are disposing their business, whether by way of disposal of business assets or disposal of shares of companies which own the business assets, should take note of the issues set out below. The disposal of business assets and/or disposal of shares of companies which own …
Seller beware: Discharge of guarantee after disposal of shares
In a share sale and purchase transaction, the transfer of shares to the buyer and payment of consideration to the seller may not necessarily signify the end of the parties’ obligations. After completion of the sale and purchase of shares, it is important to the seller to have all guarantee …
Selling or buying a business-Use a term sheet
When selling or buying a business, whether via a sale and purchase of shares or via a sale and purchase of assets, the seller and the purchaser should consider using a term sheet to set out the principal terms and conditions of the transaction. Having a term sheet enables the …
The concept of disclosure letter in M&A
In a merger and acquisition (“M&A”) transaction, it is common for the seller to give representations and warranties about the subject matter of the sale, be it shares or assets to be disposed of by the seller. The representations and warranties given by the seller are for the purchaser’s benefits, …
Common issues in mergers and acquisitions
A merger and acquisition (“M&A”) transaction involves at least two parties, the seller and the purchaser, coming together to negotiate on the terms and conditions of the sale and purchase of the target company or asset (“Target”). The agreed terms and conditions are then set out in a sale and …