Now there are other important issues such as price versus terms. I could agree to pay you $100 million for your company but if it’s $1 million a year for the next 100 years, that may not be acceptable to you, right? You’d like it to be $100 million in a lump sum. I’d like it to be $100 million over 100 years. So price versus terms, allocation or risks, these are the things most of the time is spent on. Everything else is usually a cousin of one of those two.
The last thing I would add is there’s a chunk in the agreement that just deals with all kinds of mechanics and logistics. You know, when do we close, conditions to closing, those are contentious but not nearly as contentious as the first two. If you had to break down the purchase agreement into three categories, it would be: allocation of risk, price and terms, and mechanics and logistics. Usually, it’s negotiated in exactly that order of the three buckets.
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Written by Andrew J. Sherman
Andrew J. Sherman is a Partner in the Corporate Department of Seyfarth Shaw LLP