Insights

Mergers & Acquisitions

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

Asset Purchase Versus Equity Purchase in a Private Company Acquisition

An acquisition can transfer selected business assets or the ownership interests in the entity that operates the business. That choice determines which property changes hands, which party remains liable for existing obligations, how contracts and permits are handled, and whether the buyer receives a new tax basis in the operating assets.

Disclosure Schedules in Private Company Acquisitions

Disclosure schedules turn a seller's representations and warranties into statements about the business being sold. A purchase agreement may state that the company owns its intellectual property, has complied with applicable law, has no pending litigation, and isn't in default under any material contract, each subject to exceptions identified in the schedules. Those exceptions affect the buyer's obligation to close and its remedies after closing.

Earnouts in M&A Deals: Drafting a Price That Depends on Future Performance

A seller may value a business at $8 million based on projected growth while a buyer values the same business at $6 million after discounting those projections for execution risk. The parties can place some of the purchase price behind the disputed forecast through an earnout.

Escrows and Holdbacks in M&A Deals: Funding Post-Closing Obligations

After closing, a buyer may have an indemnification claim, a working capital adjustment, or a right to recover for a known liability. The payment mechanism determines whether the buyer can collect from dedicated funds or must pursue the seller.

M&A Closing Mechanics and Post-Closing Obligations

At closing, the buyer pays the agreed consideration, the parties release signed documents, and ownership transfers under the purchase agreement and the applicable transfer instruments. That exchange requires more than a signature on the purchase agreement. Counsel must confirm authority, closing conditions, funds flow, debt payoff, lien releases, ancillary agreements, and the exact time when each party may release its signatures.

M&A Due Diligence Before You Sign the Purchase Agreement

You conduct due diligence to determine whether the business you were offered is the business you will own after closing. The investigation should verify ownership, earnings, assets, contracts, liabilities, compliance, and the seller's authority to complete the transaction. It should also identify the consents, payoffs, corrective work, and contractual protection you need before you commit to close.

M&A Letters of Intent and the Terms That Bind Before Closing

An M&A letter of intent (LOI) records the principal terms of a proposed acquisition before the parties negotiate the purchase agreement. Buyers and sellers commonly intend the price, structure, consideration, and closing conditions to guide negotiations without requiring either side to close. They often intend exclusivity, confidentiality, expenses, access, governing law, and dispute provisions to be binding as soon as they sign.

Noncompetes and Transition Agreements After a Business Sale

A buyer that pays for a business's goodwill expects the seller to leave its customer relationships, workforce, reputation, and operating knowledge with the business. A seller who opens a competing company after closing can redirect those relationships before the buyer has time to establish them. Sale agreements address that risk through noncompetition and nonsolicitation covenants, while transition services and consulting agreements define the seller's permitted post-closing work.

Purchase Price Adjustments in Private Company Acquisitions

A buyer and seller may agree on a headline price in the [letter of intent (LOI)](/blog/ma-letter-of-intent), but that number often assumes a stated amount of working capital, no seller debt, an agreed treatment of cash, and payment of the seller's transaction expenses. The purchase agreement converts those assumptions into the amount paid at closing and any adjustment after closing.