M&A Activity -- Expect a Surge in Mergers

Purchase Agreements can range from 30 to 60 pages or more and thoroughly describe every aspect of a transaction.

These agreements are signed by both parties at closing and contain: (1.) full details and the buyer's commitments for the purchase price and its structural components; (2.) the assets or stock being acquired; (3.) the seller and buyer representations and warranties; (4.) the method of calculation and timing of the payment or deduction of a working capital adjustment; (5.) the non-compete/employment agreements for selling shareholders who may be staying on or are leaving the company; (6.) the timing and nature of any post-closing adjustments to the purchase price; (7.) the amount, conditions and timing for the release of any escrow being held by the buyer to cover any unforeseen seller liabilities; (8.) the basket and cap language covering any unknown or unscheduled liabilities; (9.) a delineation of any excluded assets or liabilities; (10.) and the term and financial limit for the seller's overall liability.