M&A Boot Camp booklet 2023 - Flipbook - Page 40
f.
4.
C.
VII.
i)
Restrictions imposed under federal securities laws if the
shares are issued in reliance on the §4(2) or Regulation D
exemption from registration (including a possible holding
period)
ii)
Negotiated contractual restrictions
A vote of the acquirer’s stockholders may be required under some
circumstances
Other forms of consideration
Allocation of purchase price in asset acquisitions
SIGNIFICANT NON-PRICE PROVISIONS OF THE ACQUISITION
AGREEMENT
A.
Representations and warranties regarding the target company and its business;
indemnification provisions
1.
Purposes of representations and warranties –
a.
Allow the acquirer to call off the acquisition if significant
inaccuracies in representations and warranties are discovered
before closing
b.
Provide a basis for obtaining comprehensive information (included
in disclosure schedules) regarding the target company and its
business
c.
Provide a remedy to the acquirer after the closing of the acquisition
in the event the target company and its business were not
accurately portrayed to the acquirer; allocation of risks between the
parties
2.
Post-closing consequences of inaccurate representations and warranties –
the acquirer is “indemnified” against the damages arising from the
inaccuracies
3.
Scope of representations and warranties
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a.
“As is” acquisitions vs. acquisitions
representations and warranties
b.
Certain representations may be particularly controversial – e.g.,
“no undisclosed liabilities” representation; representation covering
“contingent” liabilities; “full disclosure” (“10b-5”) representation
11
with
comprehensive