A closing memorandum is a narrative used to interpret the clauses in a purchase and sale agreement after the deal has closed. This document is also known as the closing agenda.
Earnouts are difficult legal clauses to manage and can often lead to misunderstanding and difficulty realizing them. Here is a practical example of some of the pitfalls that sellers should watch for.
Earnout clauses are becoming more and more common in purchase and sale agreements, especially in a volatile economy or where the target company’s earnings have fluctuated over past years. There are many risks associated with earnouts and if their provisions are not properly drafted in the definitive agreement, then the seller stands a good chance of getting burned.
Here is an example of where a seller can get burned on an earnout:
Purchase and Sale Agreement
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Peter's practice focuses on mergers and acquisitions (M&A), banking, general business, and business succession law. Peter works to partner with his clients and commits to understanding their legal needs and providing great client service. Full Bio
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