Insights

Mergers & Acquisitions

M&A insights on deal structure, due diligence, purchase price, earnouts, and closing mechanics.

Asset Purchase Versus Equity Purchase: How the Structure Decision Affects Risk, Taxes, and Successor Liability

Before a single provision of the purchase agreement is negotiated, the buyer and seller must answer a threshold question that affects every aspect of the transaction. Is the buyer acquiring the company's assets, or is the buyer acquiring the ownership interests (stock, membership interests, or partnership interests) of the entity that owns them?

Closing and Post-Closing: How the Transaction Gets Executed and What Happens After Funds Transfer

Closing is the moment when ownership changes hands. Money transfers from the buyer to the seller, documents are executed and delivered, and the business becomes the buyer's. Closing is a coordinated exchange of documents, funds, and filings that requires every pre-closing condition to be satisfied, every deliverable to be prepared and signed, and every wire transfer to be initiated and confirmed before the transaction is complete.

Disclosure Schedules: How Sellers Qualify Their Representations and What Buyers Should Scrutinize

A purchase agreement contains representations and warranties in which the seller states that certain things about the business are true. "There is no pending litigation." "All material contracts are in full force and effect." "The company has filed all required tax returns." But few businesses can make those statements without exceptions.

Due Diligence for Buyers: What to Investigate Before You Sign the Purchase Agreement

Due diligence is the investigation period between signing the letter of intent and committing to the purchase agreement. It's the buyer's opportunity to verify everything the seller has represented about the business, discover what the seller hasn't disclosed, and price the deal based on verified facts rather than projections and promises.

Earnouts: When Buyer and Seller Disagree on Value and Agree to Let the Business Decide

A seller who built a business over 20 years believes it's worth $8 million based on projected growth. A buyer looking at the same financials, discounting the projections for risk, believes it's worth $6 million. Both numbers can be right, because the two sides are pricing different futures.

Escrows and Holdbacks: How Post-Closing Indemnification Gets Funded

An indemnification clause in a purchase agreement is a promise by the seller to compensate the buyer for losses arising from breaches of representations, warranties, and covenants. But a promise is only as valuable as the promisor's ability to pay.

Letters of Intent in M&A: What's Binding, What's Not, and Why the LOI Frames Every Negotiation That Follows

A letter of intent in an M&A transaction is a three-to-eight-page document that outlines the proposed terms of a business acquisition before either party commits to a binding purchase agreement. Most of it isn't enforceable. And yet it's one of the most consequential documents in the deal, because the terms the parties agree to in the LOI become the baseline for every negotiation that follows.

Noncompete and Transition Agreements After a Business Sale: What Sellers Agree to and Why Courts Enforce Them

When a buyer acquires a business, a significant portion of what it's paying for is goodwill, the company's relationships with customers, suppliers, employees, and the community. If the seller can immediately open a competing business across the street and call every customer, the goodwill the buyer purchased disappears.

Purchase Price Mechanics: Working Capital Adjustments, Net Debt, and How the Final Number Gets Calculated

When a buyer and seller agree to a $5 million purchase price in the letter of intent, most sellers assume they'll receive $5 million at closing. They rarely do. In almost every private company acquisition, the price stated in the LOI is the enterprise value, not the equity value.