What clauses should a business owner pay particular attention to in a Purchase Sale Agreement?
Well, now we have to define what does a "big deal" mean and what does materiality means? So pay careful attention to the reps and warranties that you’re making. Pay careful attention to the knowledge standard that’s being applied. This is what often trips up business owners in post closing disputes.
The second thing I would say to this question is look carefully at the conditions to closing. They may be mechanical or logistical issues but they are still your problem. If there are 10 things you need to get done as a condition of closing, you better know what they are. It’s just like selling a house. If the buyer says, "We’ll go to closing as soon as you fix the leaky drain, as soon as you take the stain off the wood floors, as soon as you get the stink out of the basement from black mold," those are all things that are your responsibility or you don’t go to closing. So read those conditions to closing carefully, have a game plan, and a team in place for addressing those conditions to closing.
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Written by Andrew J. Sherman
Andrew J. Sherman is a Partner in the Corporate Department of Seyfarth Shaw LLP