Reps & Warranties of Buyer

Downloads are available for subscribers

Chapters

Summary Text

This section of the purchase agreement contains statements of fact and assurances made by the Buyer that must be true and correct as of the closing date. In an aggressively summarized format, the Seller is looking to have the following confirmed: 

  1. That the Buyer has the authority to enter into the purchase agreement and make the acquisition.
  2. That the Buyer is duly organized, validly existing and in good standing.
  3. That there are not additional brokers that will benefit from the transaction beyond what is stated in the purchase agreement.
  4. That the Buyer has sufficient knowledge of the Company and is acquiring the securities of the Company for its own account.
  5. That the Buyer has sufficient funds to complete the transaction.
In contrast to the Representations and Warranties of the Seller, the Representations and Warranties of the Buyer are more limited and primarily focus on fundamental representations and warranties. This is largely because the single greatest concern from the Seller’s perspective is the Buyer’s ability to pay the purchase price. As such, there is generally very little negotiation that takes place as it relates to this section of the purchase agreement.
 
Stock Purchase Agreement Language: The PDF notes available for download contain hypothetical language detailing the above sequence as it might appear in a stock purchase agreement. 
 

 

Next Lesson »
POSTED BYASM+ TeamTags:Representations and Warranties