Legal Representation in a Sale of Business Transaction

What to expect from your attorney

• Trust and communication
• Knowledge and experience
• Appreciation of urgency and timetable of deal
• Skill in the art of “creative compromise”

ATTORNEY’S ROLE IN SELLING YOUR COMPANY

• Assistance in deal structuring
• Negotiating
• Documenting; and
• Closing the deal.

STAGES IN THE LEGAL PROCESS

• Letter of Intent
• The Definitive Purchase Agreement
• Satisfaction of Conditions Precedent to Closing
• Closing

THE LETTER OF INTENT

• What is it
• Why is it important to Seller

THE DEFINITIVE PURCHASE AGREEMENT

• Which attorney drafts it and why
• Representation and warranties, covenants, conditions and indemnification: The definitive agreement as a risk-shifting device.

HOW THE ATTORNEY CAN ASSIST IN KEEPING SOME OF THE RISKS ON THE BUYER

• Assistance with disclosure schedules
• Qualifications and limitations on representations and warranties
• Limitations on buyer’s come-back rights: baskets, ceilings and cut-offs on claims
• Blunting requests for set-offs and escrows

THE SELLER’S REVENGE: SECURITY FOR THE DEFERRED PURCHASE PRICE

• Cash is king
• Security devices abound

EXAMPLES OF CONDITIONS TO CLOSING

• Termination of unwanted distributors
• Consent of third parties to contracts
• Employment agreements with key employees
• Shareholder consents
• Compliance with environmental laws (ISRA)
• Pension issues
• Legal opinions

THE CLOSING

• The best closing is a short closing
• Postscript