M&A Boot Camp booklet 2023 - Flipbook - Page 33
II.
III.
BASIC CHRONOLOGY OF AN ACQUISITION TRANSACTION
A.
Confidentiality agreement
B.
Letter of intent
C.
Pre-acquisition (“due diligence”) review
D.
Preparation by the acquirer of draft of definitive acquisition agreement, and
negotiation between the sellers (or the target company) and the acquirer;
preparation by the sellers (or the target company) of disclosure schedules
E.
Signing of definitive acquisition agreement
F.
Satisfaction of closing conditions (e.g., governmental permits and third party
consents, “bring-down” of representations and warranties)
G.
Closing
H.
Post-closing period – payments under promissory notes, “earn out” provisions,
employment or consulting agreements and non-competition agreements; claims
for indemnification
CONFIDENTIALITY AGREEMENTS
A.
Generally, the first agreement signed in an acquisition transaction
B.
The acquirer wishes to obtain certain information about the target company to
evaluate whether or not to make offer to acquire assets or stock of the target
company (and, perhaps, to allow the acquirer’s lenders to determine whether to
finance the acquisition)
C.
The target company wishes to protect confidentiality of trade secrets and other
confidential information disclosed to the acquirer; the acquirer may want
protection as well if it discloses its trade secrets or confidential information to the
target company (or to stockholders of the target company), where, for example,
acquirer will be issuing stock or a promissory note in the acquisition; the parties
(and especially the target company) may also want to maintain confidentiality of
the potential transaction
1.
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Uniform Trade Secrets Act – requires reasonable measures to protect trade
secrets
a.
Confidentiality agreements help to demonstrate these reasonable
efforts
b.
Information furnished should be stamped “Confidential”
4