Every transaction has a milestone – the so-called final contract.
At the outset, it must be faithful to the letter of intent. The latter represents the broad outlines of the transaction that allowed the buyers and sellers to go ahead and begin the due diligence. The quantity of information has multiplied, and certain adjustments may be made with the discovery of risks and other factors.
The purchase agreement is usually drafted by lawyers specialized in business law. Effective cooperation between professionals, such as the accountants, tax specialists, and the broker will ensure that the contract is sound and representative of the wishes.
This contract is used to finalize the details of a transaction. It contains the following information:
- The monetary aspect, such as purchase price, payment terms, balance of sale and related conditions.
- Other important aspects include representation and warranty clauses, non-competition clauses and any other commercial aspects that have been agreed upon.
- The schedules, which are attached documents, include the financial statements, the various corporate obligations, and other documents that will serve as future reference.
- It is also accompanied by the closing agenda and various other documents.
The purchase agreement is one of the key elements of the M&A process, as it defines the terms and conditions of the acquisition, which can affect how the parties involved will conduct business after the conclusion of the transaction.