Buyer's Representations and Warranties in a Business Sale

Gain an understanding on the representations and warranties typically required in a business sale and how to negotiate them.

In this market, buyers are eager to find appropriate businesses to acquire. Most buyers and their advisors focus on finding a business for sale, kicking the tires a bit, and setting a purchase price, and then assume they are ready to close the deal, but they may have overlooked a major part of buying a business: reaching an agreement with the seller on representations and warranties. This topic will help buyers and their advisors know what to expect in the way of representations and warranties that a seller should be required to make in a purchase agreement. Review the representations and warranties that buyers should be willing to make to sellers, but more importantly what representations and warranties buyers should require sellers to make. Learn what representations and warranties are typical, which ones are currently the focus in many transactions, and which representations and warranties can be dangerous to buyers if not properly structured. Learn when to buy a business as is, how to negotiate reasonable representations and warranties, how to control potential liability related to breach of representations and warranties, and when to negotiate insurance coverage for that potential liability. The material will also cover companion clauses that relate to representations and warranties and explain how those clauses can limit or expand a buyer's ability to hold a seller responsible for problems. Learn what steps to take prior to the purchase to facilitate the negotiation and closing process.