What exactly are purchase agreement essentials? When dealing with M&A transactions, it’s important to know everything about the purchase agreement and what the terminology means. Otherwise, you may not completely understand the contract. Pay close attention to language and spacing.
The purchase agreement will contain a section titled “General” or “Miscellaneous” or something similar. It may also include a section with definitions of terms used throughout the purchase agreement. These purchase agreement provisions are sometimes called “boilerplate provisions.” and typically help answer the following questions.
These provisions tell each party how terms in the contract are changed or enforced so the terms of the agreement are clear and mutually agreed upon.
Purchase agreements use boilerplate provisions to specify who has obligations and who can enforce the terms. The purchase agreement specifies what happens if one party assigns its rights to a new party.
Below are three common provisions:
Parties communicate about contract issues through a notice provision. Notice provisions list contact information for the parties and attorneys and specify methods of delivery (e.g., overnight courier, hand-delivery, registered mail, etc.).
Purchase agreement essentials include the following provisions:
Clauses that guide the interpretation of a purchase agreement can be as simple as clarifying a party’s gender or as complicated as defining acceptable events that may change the business’s condition.
While boilerplate provisions may seem like fine print in a “General” or “Miscellaneous” section of a purchase agreement, the implications of their language are more impactful in an M&A transaction.
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[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can listen to at your leisure and each includes a comprehensive customer PowerPoint about the topic):
This is an updated version of an article originally published on September 27, 2019. It has been updated by Maryan Pelland.]
©2022. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
Rob is a senior associate in Levenfeld Pearlstein’s Corporate & Securities Group where he focuses on mergers and acquisitions, securities transactions, startup companies, technology agreements, and general corporate matters: M&A: Rob works with privately held businesses and investment funds across a broad range of industries in the middle market in negotiating and consummating acquisition and…
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