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Product ID: 407280EAU
 

Buyer's Representations and Warranties in a Business Sale

OnDemand Webinar (94 minutes)

Gain an understanding on the representations and warranties typically required in a business sale and how to negotiate them.In this market, buyers are eager to find appropriate businesses to acquire. Most buyers and their advisors focus on finding a business for sale, kicking the tires a bit, and setting a purchase price, and then assume they are ready to close the deal, but they may have overlooked a major part of buying a business: reaching an agreement with the seller on representations and warranties. This topic will help buyers and their advisors know what to expect in the way of representations and warranties that a seller should be required to make in a purchase agreement. Review the representations and warranties that buyers should be willing to make to sellers, but more importantly what representations and warranties buyers should require sellers to make. Learn what representations and warranties are typical, which ones are currently the focus in many transactions, and which representations and warranties can be dangerous to buyers if not properly structured. Learn when to buy a business as is, how to negotiate reasonable representations and warranties, how to control potential liability related to breach of representations and warranties, and when to negotiate insurance coverage for that potential liability. The material will also cover companion clauses that relate to representations and warranties and explain how those clauses can limit or expand a buyer's ability to hold a seller responsible for problems. Learn what steps to take prior to the purchase to facilitate the negotiation and closing process.

Authors

Duncan Butcher, Miller Nash Graham & Dunn LLP Erich W. Merrill Jr., Miller Nash Graham & Dunn LLP

Agenda

Representations and Warranties Typically Required

• The Function of Representations and Warranties in Purchase Agreements

• Subjects Typically Covered by Representations and Warranties in Purchase Agreements

• What Representations and Warranties Sellers Usually Offer, and Those Buyers Should Seek From Sellers?

• Representations and Warranties That Most Often Lead to Liability or Claims

Negotiation of Representations and Warranties

• Relative Importance of Buyer's and Seller's Representations and Warranties: Focus on Those of the Seller

• When to Buy a Business As Is

• The Central Role of Knowledge and How to Define It

• Covering the Appropriate Time Period Before Sale

• Insurance Coverage for Related Liabilities, as a Term of the Sale Transaction

• Setting the Stage for Negotiation: Addressing Representations and Warranties in the Letter of Intent

Companion Clauses That Define a Seller's Liability for Representations and Warranties

• Indemnification

• Survival Periods and Fundamental Representations and Warranties

• Sandbagging: What You Know Can Hurt You

• Disclosure Schedules: Making Sure You Are Getting the Business You Expect

Making the Purchase Easy: Steps Buyers Can Take to Support Reasonable Representations and Warranties

• Due Diligence: Aligning the Process With Representations and Warranties

• Recognizing the Risk of Successor Liability

• Focusing on Risks Most Likely to Transfer to Buyers

• Working With Experienced Investment Bankers, Accountants, and Counsel