Académique Documents
Professionnel Documents
Culture Documents
1. Confidentiality Agreements
2. Asset or Stock Sale Agreement
3. Assignment & Assumption Agreements
4. Real Estate Purchase Agreements (if not included in the main Agreement)
5. Environmental Agreement (if not included in the main Sale Agreement)
6. Bills of Sale (and other instruments of transfer)
7. Schedules to Agreements
8. Opinions of Counsel
9. Officer’s Certificate
10. Compliance Certificates
11. Develop appropriate purchase price adjustment mechanism, if necessary
12. Determine Position on Key Points:
(a) Representations and warranties
(b) Scope of indemnification: cap/time to assert/basket
(c) Liabilities to be retained/assumed by buyer
(d) Conditions to closing
(e) Damages clause in the event of failure of buyer to close
(f) Treatment of employees & benefit plans
(g) Pre-closing restrictive covenants of seller
(h) Covenants of buyer (such as access to records)
(i) Post-closing transition
(j) As-is sale with all faults? – disclaimers of representations or warranties?
(k) Assumption by buyer of designated existing contracts (service as well as sales).
(l) Buyer’s cooperation if seller intends to complete transaction as part of a tax free
exchange.
(m) Risk of loss prior to closing (casualty, condemnation) – materiality standard.
(n) Consents and approvals of third parties
(o) Proration and allocation of closing costs: transfer taxes, escrow fees, title
insurance premiums, recording fees.
(p) Assumption by buyer of various deferred obligations?
(q) Arbitration clause.
(r) Non-compete provision.
(s) Supply agreements.
Antitrust and Regulatory
Data Room
(1) List of banks or other lenders with whom Company has a financial relationship
(briefly describe nature of relationship - lines of credit, equipment lessor, etc.).
(2) Credit agreements, debt instruments, security agreements, mortgages, financial or
performance guaranties, indemnifications, liens, equipment leases or other
agreements evidencing outstanding loans to which the Company is a party or was
a party within the past two years.
(3) All material correspondence with lenders during the last three years, including all
compliance reports submitted by the Company or its accountants.
(4) List of major clients and their locations.
(5) Any other material contracts.
(D) Litigation
(1) Audited financial statements since inception (unaudited if audited financials are
unavailable).
(2) Quarterly income statements for the last two years and the current year (to date).
(3) Financial or operating budgets or projections.
(4) Business plan and other documents describing the current and/or expected
business of the Company including all material marketing studies, consulting
studies or reports prepared by the Company.
(5) A description of all changes in accounting methods or principles during the last
three fiscal years.
(6) Any documents relating to material write-downs or write-offs other than in the
ordinary course.
(7) Revenue, gross margin and average selling price by product or service.
(8) Management letters or special reports by auditors and any responses thereto for
the last three fiscal years.
(9) Letters of counsel to the Company delivered to auditors for the last three fiscal
years.
(10) Aging schedules for accounts receivable for the last two years.
(11) Breakdown of G&A expenses for the last two years.
(12) Copies of any valuations of the Company's stock.
(13) Description of all contingent liabilities.
(G) Property
(1) List of real and material personal property owned by the Company.
(2) Documents of title, mortgages, deeds of trust and security agreements pertaining
to the properties listed in (1) above.
(3) All outstanding leases with an original term greater than one year for real and
personal property to which the Company is either a lessor or lessee.
(4) Documents pertaining to proprietary technology developed/owned by the
Company, including any copyright or patent filings. This will also include
information confirming that the Company's systems, software and technology is
owned solely by the Company and does not infringe on any other party's rights.
(H) Taxation
(1) Any notice of assessment, revenue agents' reports, etc. from federal or state
authorities with respect to any currently "open" years.
(2) Federal and state income tax returns for the last three years.
(3) Evidence of Company being current on sales tax, unemployment, social security,
and other tax payments.
(1) Schedule or copies of all material insurance policies of the Company covering
property, liabilities and operations, including product liabilities.
(2) Schedule of any other insurance policies in force such as "key man" policies or
director indemnification policies.
(3) All other relevant documents pertaining to the Company's insurance and liability
exposure, including special reserve funds and accounts.
(L) Miscellaneous
1. Employee Hiring
(a) Consider whether buyer should be required to hire:
(i) All employees working at the business;
(ii) All employees other than those who are out on long term disability or
other leave;
(iii) All employees for at least 60 days; or
(iv) No employees other than those it wishes to hire.
(b) With respect to union employees, consider whether buyer should be required to
adopt/assume any existing collective bargaining agreements with the seller. If
adoption or assumption by buyer is desired, is union consent required? Also what
plans will buyer have to adopt or agree to participate in as a result of hiring such
union employees and adopting or assuming the relevant collective bargaining
agreements?
2. Retention/Severance Plans
(a) Consider whether severance plan should be adopted, revised or clarified.
(b) Consider whether retention plan should be adopted, and for what group of
employees.
(c) Consider whether the acquisition should be an event causing full vesting of
affected employees (i.e., partial termination) under pension plan or 401(k) plan.
3. Consider applicability of WARN Act; prepare WARN Act notices if necessary.
4. Review collective bargaining agreements.
5. Review any employment agreements.
6. Determine whether new employment agreements are appropriate
Employee Benefits
Insurance Considerations
Intellectual Property
Internal Policies
Litigation
Real Estate
If the business includes any real estate owned by the seller, consider the
following:
1. Prepare disclosure of condition of property and any problems
2. List personal and real property
3. List any liens, encumbrances and easements
4. Address title issues
(a) Select nationally recognized title insurance company (obtain bids on title
insurance premium costs)
(b) Provide title company with copies of all legal descriptions and assessor’s parcel
numbers
(c) Confirm current vesting of title and determine if additional transfers are required
(d) Obtain copies of all underlying title exception documents
(e) Obtain/update any needed surveys
(f) Obtain information on any significant bond assessments or special assessment
districts
(g) Ascertain access rights and easements
(h) Release of existing mortgages, if any
(i) Resolve any logging/mechanics’ liens, if any
(j) Obtain pro-forma title commitments
5. Prepare transfer documents
(a) Grant Deed
(i) legal description
(ii) permitted exceptions
(iii) State Documentary Transfer Tax
(iv) preliminary change of ownership form
(v) transfer tax affidavit
(vi) nonforeign affidavit (IRC 1445)
(b) Assignment of Leases, Service Contracts and Warranties
(i) schedule of tenant leases (if any)
(ii) schedule of service contracts
(iii) schedule of warranties
(iv) schedule of licenses, permits and governmental approvals
6. Address due diligence items: review and make available copies of the following materials
to proposed
(a) Leases (ascertain assignability)
(b) Service contracts (ascertain assignability)
(c) Environmental reports
(d) Building plans, drawings, specifications (for major facilities only)
(e) Zoning and subdivision map act compliance
(f) Governmental licenses, permits and development agreements (ascertain
assignability)
(g) Surveys
Sale Process
18
DOCSSF1:380089.1